Biden tax bill
With the signing of the US rescue plan and the implementation of its programs, President Joe Biden’s administration will move on to yet another new plan that could have profound implications for the finances of American families and small business owners – tax reform. Though the details are currently unclear and legislation is likely months away, the government is expected to seek the first major tax hike since the early 1990s.
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Biden’s basics of the tax plan
Although the details are not yet known, the White House Biden’s upcoming economic plan believes that the following is possible:
Increase in corporate tax rate from 21% to 28%
Increase in individual income taxes for those who earn more than $ 400,000 annually
Extension of inheritance tax
Increase in capital gains tax for those earning $ 1 million or more annually
Cut tax breaks for certain types of businesses
This was among the suggestions Biden made while he was still on the campaign, which aimed to differentiate his tax policy from that of President Donald Trump. Some of the other planks on his platform then included increasing taxes on foreign profits and removing real estate loopholes. While there was no news of these potential plans, keep in mind that this is still just speculation. The result of the actual calculation can be very different from what is now being discussed.
Biden Tax Plan: Individual Taxes
The big point in Biden’s plan is his drive to increase individual income taxes for those who earn more than $ 400,000 annually. During the campaign, he proposed a top tax rate of 39.6%, although it is not currently known whether this is suggested in this plan.
The story goes on
Biden also plans to expand the estate tax, which currently only applies to those whose properties are valued at more than $ 11.7 million.
Finally, Biden wants to change the capital income tax rate to be higher for those who earn at least $ 1 million a year. Capital gains tax applies to money made from investments and is generally much less than taxes on money made as income or wages.
Biden Tax Plan: corporate taxes
The corporate tax rate is currently 21%. This number comes from the Trump Tax Plan, which was passed in 2017. Previously the corporate tax rate was 35%.
Biden is not proposing raising the corporate tax rate to what it was prior to the passage of Trump’s plan. Rather, he tries to split the difference and set the corporate tax rate at 28%.
The plan also provides for the ending of some tax preferences for pass-through businesses. This would result in these companies paying more and generating more government revenue.
The bottom line
With the American bailout plan, the Biden administration made some big changes in the first 100 days of administration. Now the White House is apparently turning to a more normal use of political capital – tax reform. While there is nothing concrete yet, the plan is expected to include increases in individual and corporate tax rates as well as closing certain loopholes.
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Want to know how much you will pay in various taxes based on your income? Use SmartAsset’s Income Tax, Property Tax, and Capital Gains Tax calculators to find out.
Photo credit: © iStock / OlegAlbinsky
The post Biden Tax Plan: Federal Tax, Corporate Income Tax, and Capital Gains Tax first appeared on the SmartAsset blog.