Election Coverage 2020

Comparing the Trump and Biden Tax Plans

With November fast approaching, attention has shifted towards the presidential race, where both candidates seek to distinguish their policies and initiatives. One place where the candidates stand far apart is on taxes.

  • Individual Tax Plans
  • Deductions
  • Tax Credits
  • Capital Gains
  • Education
  • Estate and Gift
  • Retirement Incentives
  • Employment/Social Security Taxes
  • Corporate Rate
  • Deductions, Deferrals, & Amortization
  • Corporate Tax Credits
  • International

Individual

Current Law
Individual Tax Rate

DTRepublican
Donald Trump

JBDemocrat
Joe Biden

Seven tax brackets: 10%, 12%, 22%, 24%, 32%, 35%, and 37% applicable to tax years beginning after Dec. 31, 2017, and before Jan. 1, 2026. Top tax rate is 37% for individual single taxpayers with incomes greater than $518,400 ($622,050 for married couples filing jointly).

After 2025, rates are scheduled to increase to pre-Tax Cuts and Jobs Act (TCJA) amounts.

Decrease the rate for an unspecified group of middle class taxpayers by 10%. For 2020, the 22% marginal tax rate applies to income over $40,125 for individuals and $80,250 for married couples filing jointly.

Fiscal Year 2021 Budget would extend 2017 TCJA provisions past 2025.

Proposed to make permanent the 2017 individual provisions.

Increase the top individual tax rate to 39.6% from 37% for those earning more than $400,000.

President Donald Trump has not yet released a tax plan for 2021, but has made numerous statements about extending tax cuts under the 2017 tax reform law commonly known as the Tax Cuts and Jobs Act (TCJA), and about passing additional middle class tax cuts. Information on his plans are from the administration’s fiscal year 2021 budget, proposals for additional stimulus, ideas advocated by administration officials and others ideas documented in the media.

Information on Vice President Joe Biden’s proposals are largely documented on his campaign website (https://joebiden.com/joes-vision/), as well as from clarifications of those proposals by economists at the Tax Foundation, Tax Policy Center, and the Penn Wharton Budget Model from the University of Pennsylvania.

Other notable sources referenced: www.IRS.gov and The Bureau of National Affairs, Inc. Note: This information is accurate as of October 5, 2020.

Individual

Current Law
Deductions

DTRepublican
Donald Trump

JBDemocrat
Joe Biden

Basic standard deduction is $12,400 for single filers and married filers filing separately, $24,800 for married filers filing jointly and $18,650 for heads of household. The basic standard deduction is scheduled to revert to pre-TCJA amounts after 2025.

The TCJA suspended the personal exemption and most individual deductions through 2025.

Taxpayers are allowed to take eligible deductions and credits against their income tax liability. The itemized deduction for state and local taxes (SALT) is capped at $10,000.

Extend the higher basic standard deduction and other deductions enacted by the TCJA that are scheduled to expire after 2025.

Fiscal Year 2021 Budget would extend 2017 TCJA provisions past 2025.

Limit total itemized deductions so the reduction in tax liability per dollar of deduction does not exceed 28%, which based on 2020 tax brackets would mean that individuals with income over $326,600 (married filing jointly) or $163,300 (single) will have the benefits of itemized deductions reduced.

Phase out the qualified business income (QBI) deduction for income above $400,000.

Cap itemized deductions at 28%. Restore PEASE for incomes above $400,000. End SALT cap.

President Donald Trump has not yet released a tax plan for 2021, but has made numerous statements about extending tax cuts under the 2017 tax reform law commonly known as the Tax Cuts and Jobs Act (TCJA), and about passing additional middle class tax cuts. Information on his plans are from the administration’s fiscal year 2021 budget, proposals for additional stimulus, ideas advocated by administration officials and others ideas documented in the media.

Information on Vice President Joe Biden’s proposals are largely documented on his campaign website (https://joebiden.com/joes-vision/), as well as from clarifications of those proposals by economists at the Tax Foundation, Tax Policy Center, and the Penn Wharton Budget Model from the University of Pennsylvania.

Other notable sources referenced: www.IRS.gov and The Bureau of National Affairs, Inc. Note: This information is accurate as of October 5, 2020.

Individual

Current Law
Tax Credits

DTRepublican
Donald Trump

JBDemocrat
Joe Biden

A child with an individual taxpayer identification number (ITIN) cannot be claimed for the child tax credit but can be claimed for the $500 other dependent credit. A taxpayer with an ITIN is eligible to claim the child tax credit and the $500 other dependent credit.

Maximum child tax credit is $2,000 for each child under age 17. After 2025, this amount is scheduled to revert to the pre-TCJA amount of $1,000.

Maximum child- and dependent-care credit is $1,200.

Workers older than 65 who do not have a qualifying child are not eligible for the earned income tax credit (EITC).

No tax credit for first-time homebuyers or renters.

Require a dependent to have a Social Security number (SSN) to be eligible to be claimed for the $500 other dependent credit. Require a taxpayer to have a valid SSN to claim both the child tax credit and the $500 other child dependent credit.

Extend the current $2,000 child tax credit beyond the TCJA expiration date of 2026.

Expand dependent care credit to $8,000. Families will get back as a tax credit as much as half of their spending on childcare for children under age 13, up to a total of $8,000 for one child or $16,000 for two or more children. The tax credit will be refundable and will explore ways to make it advanced. The full 50% reimbursement will be available to families making less than $125,000 a year. All families making between $125,000 and $400,000 will receive a partial credit ensuring that in no case will they get less than what they are eligible for today.

Expand the EITC to workers older than 65 who do not have a qualifying child.

Enact a $5,000 tax credit for family caregivers of individuals who have certain physical or cognitive needs.

Create a refundable, advanceable tax credit of up to $15,000 to assist buying a first-home. Credit paid upon purchase, not when filing tax return.

Enact a renter’s tax credit, designed to reduce rent and utilities to 30% of income for low-income individuals and families who make too much money to qualify for a Section 8 voucher. Allocate $5 billion in federal funding for the tax credit every year.

President Donald Trump has not yet released a tax plan for 2021, but has made numerous statements about extending tax cuts under the 2017 tax reform law commonly known as the Tax Cuts and Jobs Act (TCJA), and about passing additional middle class tax cuts. Information on his plans are from the administration’s fiscal year 2021 budget, proposals for additional stimulus, ideas advocated by administration officials and others ideas documented in the media.

Information on Vice President Joe Biden’s proposals are largely documented on his campaign website (https://joebiden.com/joes-vision/), as well as from clarifications of those proposals by economists at the Tax Foundation, Tax Policy Center, and the Penn Wharton Budget Model from the University of Pennsylvania.

Other notable sources referenced: www.IRS.gov and The Bureau of National Affairs, Inc. Note: This information is accurate as of October 5, 2020.

Individual

Current Law
Capital Gains

DTRepublican
Donald Trump

JBDemocrat
Joe Biden

Top tax rate for capital gains and qualified dividends is 20% for income over $441,450 for individuals and $496,600 for married couples filing jointly. There is also a 3.8% net investment income tax (NIIT).

Taxpayers may elect to defer recognition of, and avoid recognition of future appreciation related to capital gain from certain sales or exchanges of property by investing the gain in a qualified opportunity fund (QOF).

Would consider indexing capital gains for inflation.

Seeking to cut capital gains rate by executive action. Would cut maximum capital gains rate to 15% if re-elected.

Increase the top marginal income tax rate on long-term capital gains to 39.6% for taxpayers earning more than $1 million annually.

Would reform opportunity zones.

The NIIT remains.

President Donald Trump has not yet released a tax plan for 2021, but has made numerous statements about extending tax cuts under the 2017 tax reform law commonly known as the Tax Cuts and Jobs Act (TCJA), and about passing additional middle class tax cuts. Information on his plans are from the administration’s fiscal year 2021 budget, proposals for additional stimulus, ideas advocated by administration officials and others ideas documented in the media.

Information on Vice President Joe Biden’s proposals are largely documented on his campaign website (https://joebiden.com/joes-vision/), as well as from clarifications of those proposals by economists at the Tax Foundation, Tax Policy Center, and the Penn Wharton Budget Model from the University of Pennsylvania.

Other notable sources referenced: www.IRS.gov and The Bureau of National Affairs, Inc. Note: This information is accurate as of October 5, 2020.

Individual

Current Law
Education

DTRepublican
Donald Trump

JBDemocrat
Joe Biden

No tax credit for contributions to state-identified not-for-profit scholarship-granting organizations (SGOs), though some amount might be deductible as a charitable contribution.

Loan forgiveness is generally included in income unless an exception applies. Student loan forgiveness is includible in income unless the individual worked for a certain period of time in certain professions for any of a broad class of employers.

Enact the Education Freedom Scholarship tax credit, which would provide $5 billion in dollar-for-dollar federal tax credits annually for individuals and businesses that donate to qualified not-for-profit SGOs.

Fiscal Year 2021 Budget would extend 2017 TCJA provisions past 2025.

Student loans will be cancelled, tax-free, after borrowers have been enrolled in the income-based repayment plan for 20 years.

President Donald Trump has not yet released a tax plan for 2021, but has made numerous statements about extending tax cuts under the 2017 tax reform law commonly known as the Tax Cuts and Jobs Act (TCJA), and about passing additional middle class tax cuts. Information on his plans are from the administration’s fiscal year 2021 budget, proposals for additional stimulus, ideas advocated by administration officials and others ideas documented in the media.

Information on Vice President Joe Biden’s proposals are largely documented on his campaign website (https://joebiden.com/joes-vision/), as well as from clarifications of those proposals by economists at the Tax Foundation, Tax Policy Center, and the Penn Wharton Budget Model from the University of Pennsylvania.

Other notable sources referenced: www.IRS.gov and The Bureau of National Affairs, Inc. Note: This information is accurate as of October 5, 2020.

Individual

Current Law
Estate and Gift

DTRepublican
Donald Trump

JBDemocrat
Joe Biden

For 2020, the exempt amount for estate and gift taxes is $11.58 million. After 2025, this amount is scheduled to revert to the pre-TCJA indexed amount of approximately $5.8 million.

Transfers of appreciated property at death get a “step-up in basis.”

Fiscal Year 2021 Budget would extend 2017 TCJA provisions past 2025.

Eliminate step-up in basis rule that allows people to pass capital gains to heirs without tax after death.

President Donald Trump has not yet released a tax plan for 2021, but has made numerous statements about extending tax cuts under the 2017 tax reform law commonly known as the Tax Cuts and Jobs Act (TCJA), and about passing additional middle class tax cuts. Information on his plans are from the administration’s fiscal year 2021 budget, proposals for additional stimulus, ideas advocated by administration officials and others ideas documented in the media.

Information on Vice President Joe Biden’s proposals are largely documented on his campaign website (https://joebiden.com/joes-vision/), as well as from clarifications of those proposals by economists at the Tax Foundation, Tax Policy Center, and the Penn Wharton Budget Model from the University of Pennsylvania.

Other notable sources referenced: www.IRS.gov and The Bureau of National Affairs, Inc. Note: This information is accurate as of October 5, 2020.

Compensation and Benefits

Current Law
Retirement Incentives

DTRepublican
Donald Trump

JBDemocrat
Joe Biden

Eligible employees can contribute a portion of their salary to a qualified retirement plan (401(k), 403(b), 457, etc.). The deferred salary is not included in taxable income until withdrawn. Penalties apply for early withdrawal.

Not all employers offer qualified retirement plans.

Minimum distributions required when taxpayer turns 72.

Fiscal Year 2021 Budget would extend 2017 TCJA provisions past 2025.

Create “automatic 401(k)” for workers without access to pension or 401(k) plans. Allow 401(k) plans to offer hardship withdrawals for survivors of domestic violence or sexual assault and allow penalty-free distributions for such persons. Equalize the tax benefits of defined contribution plans across the income scale.

Allow caregivers to make “catch-up” contributions to retirement accounts, even if they’re not earning income in the formal labor market.

Offer tax credits to small businesses to offset much of the cost of starting or maintaining retirement plans.

President Donald Trump has not yet released a tax plan for 2021, but has made numerous statements about extending tax cuts under the 2017 tax reform law commonly known as the Tax Cuts and Jobs Act (TCJA), and about passing additional middle class tax cuts. Information on his plans are from the administration’s fiscal year 2021 budget, proposals for additional stimulus, ideas advocated by administration officials and others ideas documented in the media.

Information on Vice President Joe Biden’s proposals are largely documented on his campaign website (https://joebiden.com/joes-vision/), as well as from clarifications of those proposals by economists at the Tax Foundation, Tax Policy Center, and the Penn Wharton Budget Model from the University of Pennsylvania.

Other notable sources referenced: www.IRS.gov and The Bureau of National Affairs, Inc. Note: This information is accurate as of October 5, 2020.

Compensation and Benefits

Current Law
Employment/Social Security Taxes

DTRepublican
Donald Trump

JBDemocrat
Joe Biden

Payroll tax applied on worker’s wages up to $137,700 for 2020. FICA tax of 12.4% split between employer and employee.

Most workers can contribute and get preferential tax treatment on up to $19,500 a year in a 401(k) account (extra $6,500 if age 50 or higher) in 2020. Highly paid executives can contribute an unlimited amount in certain tax advantaged plans.

Through Executive Order optional deferment of payroll taxes from Sept. 1 through Dec. 31 for workers earning up to $104,000 a year. Treasury Secretary Mnuchin believes many businesses will continue to collect payroll taxes despite the order.

End employers intentionally misclassifying their employees as independent contractors to avoid paying employment taxes. Lift social security taxable wage base cap on high earners (taxpayers making more than $400,000). Currently, employers and employees would each be subject to a maximum Social Security tax of $8,537.40 in 2020 for each employee. This is based on the 6.2% tax rate for both the employee and employer on the $137,700 wage base, which is adjusted for a cost-of-living adjustment annually. The 12.4% Social Security tax would be expanded to also apply to an individual’s earnings in excess of $400,000. It is not clear if this additional tax would be borne solely by the employee or split between the employer and employee.

President Donald Trump has not yet released a tax plan for 2021, but has made numerous statements about extending tax cuts under the 2017 tax reform law commonly known as the Tax Cuts and Jobs Act (TCJA), and about passing additional middle class tax cuts. Information on his plans are from the administration’s fiscal year 2021 budget, proposals for additional stimulus, ideas advocated by administration officials and others ideas documented in the media.

Information on Vice President Joe Biden’s proposals are largely documented on his campaign website (https://joebiden.com/joes-vision/), as well as from clarifications of those proposals by economists at the Tax Foundation, Tax Policy Center, and the Penn Wharton Budget Model from the University of Pennsylvania.

Other notable sources referenced: www.IRS.gov and The Bureau of National Affairs, Inc. Note: This information is accurate as of October 5, 2020.

Corporate

DTRepublican
Donald Trump

JBDemocrat
Joe Biden

No change to the current 21% rate.

Increase the corporate tax rate from 21% to 28%.

Impose a new corporate minimum tax on corporations with book income over $100 million, which would primarily target companies that report little to no taxable income but report significant income for financial accounting purposes.

Impose a tax penalty on corporations that ship jobs overseas in order to sell products back to America.

President Donald Trump has not yet released a tax plan for 2021, but has made numerous statements about extending tax cuts under the 2017 tax reform law commonly known as the Tax Cuts and Jobs Act (TCJA), and about passing additional middle class tax cuts. Information on his plans are from the administration’s fiscal year 2021 budget, proposals for additional stimulus, ideas advocated by administration officials and others ideas documented in the media.

Information on Vice President Joe Biden’s proposals are largely documented on his campaign website (https://joebiden.com/joes-vision/), as well as from clarifications of those proposals by economists at the Tax Foundation, Tax Policy Center, and the Penn Wharton Budget Model from the University of Pennsylvania.

Other notable sources referenced: www.IRS.gov and The Bureau of National Affairs, Inc. Note: This information is accurate as of October 5, 2020.

Corporate

DTRepublican
Donald Trump

JBDemocrat
Joe Biden

Expand the meal and entertainment expense deduction.

Extend the 100% bonus depreciation that is scheduled to phase out beginning in 2023.

Retain the current deduction for research and development that is scheduled to expire after 2021.

Establish tax deductions for small businesses, restaurants, and the tourism industry as they look to rebuild after the pandemic.

Fiscal Year 2021 Budget does not include any planned change to current law for qualified business income (QBI). Under the current law, taxpayers other than C corporations generally are allowed to deduct 20% of QBI from a partnership, S corporation, or sole proprietorship, as well as 20% of qualified REIT dividends and qualified publicly traded partnership income.

Terminate pharmaceutical corporations’ tax break for advertisement spending.

Increase the depreciable life of rental real estate.

End qualified business income deduction for real estate investors. Would take aim at like-kind exchanges and prevent investors from using real-estate losses to lower their income tax bills.

Establish incentives for opportunity zone funds to partner with not-for-profit or community-oriented organizations, and jointly produce a community benefit plan for each investment. Require reporting, public disclosure of community impact, and Treasury oversight.

End special qualifying rules for QBI, including those for real estate investors. Allow deduction to taxpayers making $400,000 and under.

President Donald Trump has not yet released a tax plan for 2021, but has made numerous statements about extending tax cuts under the 2017 tax reform law commonly known as the Tax Cuts and Jobs Act (TCJA), and about passing additional middle class tax cuts. Information on his plans are from the administration’s fiscal year 2021 budget, proposals for additional stimulus, ideas advocated by administration officials and others ideas documented in the media.

Information on Vice President Joe Biden’s proposals are largely documented on his campaign website (https://joebiden.com/joes-vision/), as well as from clarifications of those proposals by economists at the Tax Foundation, Tax Policy Center, and the Penn Wharton Budget Model from the University of Pennsylvania.

Other notable sources referenced: www.IRS.gov and The Bureau of National Affairs, Inc. Note: This information is accurate as of October 5, 2020.

Corporate

DTRepublican
Donald Trump

JBDemocrat
Joe Biden

Establish tax credits to encourage companies to bring their supply chains from overseas to the U.S.

Establish a “Made in America” 10% advanceable tax credit for companies on a broad range of investments designed to create manufacturing jobs in the U.S.

Expand the New Markets Tax Credit (NMTC) program to provide $5 billion in support every year, and make the program permanent.

Establish the Manufacturing Communities Tax Credit.

Impose a tax penalty on drug manufacturers that increase the costs of their brand, biotech, or abusively priced generic over the general inflation rate.

Expand the work opportunity tax credit to include military spouses.

Expand the low-income housing tax credit.

Create a new childcare construction tax credit to encourage businesses to build childcare facilities at places of work. Employers will receive 50% of the first $1 million of construction costs per facility.

President Donald Trump has not yet released a tax plan for 2021, but has made numerous statements about extending tax cuts under the 2017 tax reform law commonly known as the Tax Cuts and Jobs Act (TCJA), and about passing additional middle class tax cuts. Information on his plans are from the administration’s fiscal year 2021 budget, proposals for additional stimulus, ideas advocated by administration officials and others ideas documented in the media.

Information on Vice President Joe Biden’s proposals are largely documented on his campaign website (https://joebiden.com/joes-vision/), as well as from clarifications of those proposals by economists at the Tax Foundation, Tax Policy Center, and the Penn Wharton Budget Model from the University of Pennsylvania.

Other notable sources referenced: www.IRS.gov and The Bureau of National Affairs, Inc. Note: This information is accurate as of October 5, 2020.

Corporate

DTRepublican
Donald Trump

JBDemocrat
Joe Biden

Enact a 10.5% tax rate for companies that bring supply chains for medicines and related products back to the U.S.

10% offshoring penalty surtax on the profits from any production by a U.S. company overseas for sale on American soil, making the overall tax rate on those profits 30.8%.

Double the Global Intangible Low-Taxed Income (GILTI) rate to 21%, and close certain loopholes.

Implement anti-inversion regulations and penalties.

Deny deductions for moving production and jobs overseas.

President Donald Trump has not yet released a tax plan for 2021, but has made numerous statements about extending tax cuts under the 2017 tax reform law commonly known as the Tax Cuts and Jobs Act (TCJA), and about passing additional middle class tax cuts. Information on his plans are from the administration’s fiscal year 2021 budget, proposals for additional stimulus, ideas advocated by administration officials and others ideas documented in the media.

Information on Vice President Joe Biden’s proposals are largely documented on his campaign website (https://joebiden.com/joes-vision/), as well as from clarifications of those proposals by economists at the Tax Foundation, Tax Policy Center, and the Penn Wharton Budget Model from the University of Pennsylvania.

Other notable sources referenced: www.IRS.gov and The Bureau of National Affairs, Inc. Note: This information is accurate as of October 5, 2020.


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Michael-Corrente

Michael Corrente

Managing Director

Boston Tax Practice Leader

617.761.0699

mcorrente@cbiz.com

Joanna-Powell

Joanna Powell

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New England High-Net-Worth

Practice Leader

617.761.0583

jpowell@cbiz.com

David-Bussius

David Bussius

Managing Director

New England Tax Practice Leader

401.626.3239

dbussius@cbiz.com