Trump and Biden Tax Plans
The presidential election is only a few days away, and the candidates are Donald Trump, who is the current President and a Republican, and Joe Biden, who is a former Vice President and a Democrat. Both President Trump and former Vice President Joe Biden have differing views on taxation if they are elected President beginning in 2021. The following are some of their proposed tax policies:
- In 2017, the Tax Cuts and Jobs Act was signed by President Trump. This act included a number of changes to the tax laws for individuals and corporations. Since there were not enough votes in Congress to make these changes permanent, the changes were to last until 2026 and then those tax laws would revert back to their pre-2017 versions. Under the current Trump tax proposals, those tax breaks would be extended beyond 2025. Those include the following:
- Maintain top individual tax rate of 37%;
- Maintain capital gains rates of 15%;
- Maintain Increased standard deduction;
- Maintain the $10,000 limitations on itemized deductions for state and local taxes and mortgage interest;
- Maintain Estate and Gift tax exemptions (currently $11,580,000);
- As part of his COVID plan, President Trump is advocating permanent federal payroll tax cuts; and
- Continuing the 21% tax rate for certain corporations.
- Former Vice President Biden’s tax proposals would modify and in some cases repeal a number of items in the 2017 Tax Cuts and Jobs Act. Some of those changes are as follows:
- Raise the top individual tax rate back to 39.6%;
- Increase the long-term capital gains rate on certain taxpayers to 39.6%;
- For certain wealthy individuals, put limits on itemized deductions;
- Eliminate the itemized deduction $10,000 cap on state and local income taxes, as well as mortgage interest;
- Provide a credit of up to $15,000 for certain first time home buyers;
- Reduce the estate tax exemption from $11.58 million back into the $3 million to $5 million range per person;
- Eliminate the step-up in basis on certain inherited assets, thus increasing capital gains for beneficiaries when they sell that inherited asset; and
- Increase the corporate income tax rate from 21% to 28%.
It has been a contentious race for the President of the United States, and Tuesday we will hopefully find out who the next President of the United States will be.
NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.
James F. Contini II, Esq.
Certified Specialist in Estate Planning,
Trust & Probate Law by the OSBA
Krugliak, Wilkins, Griffiths & Dougherty Co., L.P.A.
405 Chauncey Avenue NW
New Philadelphia, Ohio 44663
Phone: (330) 364-3472
Fax: (330) 602-3187