During the 2020 election campaign, President Joe Biden proposed a tax plan that was drastically different from the policies and tax cuts enacted during Donald Trump’s presidency. President Biden’s plan would increase taxes on individuals earning $200,000 or more and families earning $400,000 or more, while corporations would be subject to a new minimum tax on book income.
When President Biden unveiled his economic stimulus plan earlier this year, he outlined several major tax changes. The Biden Administration will likely focus on passing tax proposals that are related to reviving the economy, including benefits targeted for low and middle-income families.
Here are the key changes from Biden’s proposed tax plan:
- The top individual federal income tax rate would increase from 37% to 39.6%
- The corporate rate would increase from 21% to 28%
- A 15% alternative minimum tax would apply to corporate book income of $100 million and higher
- Individuals earning $200,000 and families earning $400,000 or more would pay more in payroll taxes
- The maximum Child and Dependent Tax Credit would increase from $3,000 to $8,000 ($16,000 for more than one dependent)
- Tax relief would be offered for student debt forgiveness
- The first-time homebuyers credit would be reinstated
- The estate tax exemption would drop by approximately 50%
- Step-up in basis on death would be repealed
As you can see, most of Biden’s tax plan would ultimately reverse many of the changes enacted by the Trump Administration in 2017. However, the plan bars tax rate increases on people earning less than $200,000. Biden’s plan also focuses more heavily on providing tax relief for individuals in the lower tax brackets, as well as equalizing tax benefits for all taxpayers.
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