With the 2020 election only two months away, voters are considering both candidates’ plans, including their tax policy plans. Below is a brief overview of the two candidates’ proposed policies for individuals and businesses.
For individuals, Trump plans to enact a 10-percent middle-class tax cut and reduce the capital gains tax rate, as well as extend several policies enacted by the Tax Cuts and Jobs Act that are currently set to expire after 2025. These policies include the existing individual income tax rates and capital gains rates (indexed for inflation), the higher basic standard deduction, the $2,000 Child Tax Credit, and, perhaps most notably, the higher estate and gift tax exemption, which is currently $11,580,000 for 2020.
Trump’s business plan includes “Made in America” tax credits, restoring the deductibility of entertainment costs, and extending the business tax breaks enacted by the Tax Cuts and Jobs Act.
Biden’s plan for individual taxpayers includes restoring the top individual income tax rate to 39.6% for taxable income above $400,000, as well as increasing the long-term capital gain and qualified dividend rate to the ordinary income rate of 39.6% for taxable income above $1 million. He also plans to eliminate the “step-up” in basis for capital gains at death, phase out the section 199A income deduction for income above $400,000, and restore the limitation on itemized deductions for income above $400,000 to cap the tax benefit at 28%.
For businesses, Biden plans to increase the corporate tax rate to 28% (from the existing rate of 21%), impose a 15% minimum tax on corporations with book profits of $100 million or more (similar to the alternative minimum tax), expand renewable-energy-related tax credits, and end subsidies for fossil fuels.
Contact your HORNE tax advisor to discuss anticipatory planning opportunities around potential tax policy changes.