I subscribe to The Kiplinger Tax Letter, a biweekly e-newsletter providing personal finance advice, analysis and business forecasts to tax professionals, and a recent issue outlined what we might expect in tax changes under Joe Biden.
It’s no surprise that President-elect Biden wants to make tax changes, he campaigned on tax increases for regular corporations and individuals making more than $400,000, estate tax hikes and tax cuts for lower- and moderate-income people.
Here are six standout tax changes proposed by Joe Biden described in the November issue of The Kiplinger Tax Letter:
• Biden’s initial priority will be COVID-19, so he is expected to wait before proposing tax increases on the wealthy. Raising taxes before the economy fully recovers can be risky and the outcome of the Georgia Senate runoff races in early January may also play a factor in determining the approval of his proposed tax increases in the future. However, we may initially see some targeted tax hikes in an infrastructure bill to help cover costs.
• The likelihood for tax cuts for lower- and middle-income taxpayers are anticipated to happen sooner rather than later, especially if the economy continues to recover and leave these taxpayers behind. Biden wants to expand the child and dependent care tax credit and the refundable child credit as well as create a new tax credit for individuals providing long-term care to elderly relatives.
• If additional stimulus funds aren’t already passed before he takes office, Biden is expected to expand the employee retention tax credit, revive Paycheck Protection Program loans and give tax breaks to businesses to help cover the costs of making their workplace safe for workers and employees early in his administration.
• It’s also expected that he will offer retirement savings and tax incentives for individual retirement account (IRA) owners and 401(k) participants and create proposals in an effort to encourage more employers to offer workplace retirement plans.
• He is also expected to receive pressure from Republicans to make the 2017 tax law permanent since most provisions affecting individuals will expire after 2025—including the current income tax rate, the higher standard deductions and child credits, the cutback in itemized deductions, the 20 percent write-off for pass-through income and the higher estate tax exemptions.
• Health care will likely be a main focal point of a Biden-Harris Administration. Biden would like to add a public option similar to Medicare and increase the health premium tax credit for individuals who buy health insurance through a government exchange.
Biden’s tax plan may continue to evolve and change, but these are some of the possible tax changes we’re likely to see under a Biden-Harris administration.
Tax-related questions? Contact Anthony Hoffmaster, CPA, CES, MST, by phone 919-435-4413 or email firstname.lastname@example.org.