Joe Biden's Tax Plan Explained - How Joe Biden Will Affect Your Taxes & Tax Arbitrage Strategy
President Joe Biden has proposed a broad tax agenda, including tax cuts for low- and moderate-income households and significant tax increases on high-income individuals and corporations. We try to show you how it may change and tax moves you can do if plan well.
Why Taxes have to go up?
The USA has been printing money for most of 2020 going into 2021 for social programs. The delay of Payroll taxes, boost in unemployment , Stimulus checks, The warp speed program , PPP, EIDL and so much more. With all that money going out we need money to come back in.
1. Tax Rate changes- The top tax rate may go up from 37% to 39.6% or more.
2. Payroll Tax changes- We may see the a " Donut hole" effect on Social Security tax on wages. Once you go over $400,000 you may have a restart paying SSI tax at the rate of 6.2%
3. Capital Gain tax changes- We may see the capital gain tax rate go up for taxpayers who earn $1 million or more. But we fear how it will effect the market if the big wales make big moves.
4. Itemized Deduction changes- We may go back to the Obama 28% limit on deductions in a effort to reduce taxable deduction.
5. The First time homebuyer tax credit- We may see a $15,000 first time homebuyer credit in the years to come.
6. The Child Care Tax Credit- We may see an well needed increase in the child care tax credit. As child care cost go up due to minimum wage and just simple inflation. Taxpayer should have a increase of tax credits.
7. Big changes in the Step-up Basis tax law. That could take a big bite out of generational wealth transfer.
8. We may see some small business get pushed out of the QBI tax deduction law. We may also see the retreat to the C-Corp or a lot of income deferral.
9. Corporate Tax changes. Trump pushed the tax down to a flat 21% and Biden my want to bring it up 7points to 28%. It may not sound like much but the taxpayer will get hurt if companies push the effect over the the consumer.
10. Minimum Corporate tax rate. This is called the " Amazon rule" due to the fact Amazon was able to pay zero taxes on 11.2 billion in income.
We may see so much more from the Biden-Harris administration.