Biden’s Tax Plan

Biden’s tax plan consists of proposals that would raise taxes for both higher income earners and businesses.

Increase in the corporate income tax rate - Corporate tax rate from 21% to 28%.

Increase the AMT Tax - Minimum tax of 15% on companies with $100 million or more in annual net income.

Increase by Doubling the GILTI tax rate - Global Intangible Low-Tax Income (GILTI) earned by foreign subsidiaries of U.S. companies from 10.5% to 21%

Increase the individual marginal income tax rate - New top marginal income tax rate to 39.6%.

Unlimited Tax on Income over $ 400,000 - Increase payroll tax 1% and reinstating this tax for income above $400,000. Income between $137,000 and $400,000 would continue to be exempt.

Increase the rate of capital gains tax on filers with incomes above $1 million.

The Net Investment Income Tax 3.8% (NIIT) would continue to apply to these filers for a total tax rate of 43%.

Limit itemized deductions - Cap on itemized deductions of 28%.

Phase out small business income deductions over $400,000. Biden would phase out small business income deductions over $400,000.

Institute a first-time home buyer credit. - Proposed a new home buyer’s tax credit of up to $15,000 for first-time home buyers intended to aid such buyers in covering the initial costs and fees associated with purchasing a home.

Increase the child and dependent care tax credit - Under current law, parents of children under the age of 13 or those who take care of a disabled dependent living in their household are eligible for a credit.

Replace tax deductions with a 26% refundable credit for contributions to defined benefit plans.

Eliminate the stepped-up basis - End the practice of stepping-up the cost basis of inherited property to fair market value at the time of death.

Repeal the rules related to like-kind exchanges - Biden has suggested that this provision could potentially be repealed in order to raise revenue for other initiatives.

Increase the estate tax rate - Raising the estate tax rate which is currently set at 40%.

Decrease in the estate and gift tax exemption - From estate and gift tax exemption of $11,580,000 is set to decrease on to $5,000,000. The exemption related to generation-skipping tax be set as low as $3,500,000 per individual and that the exemption for gifts could set as low as $1,000,000.