General Benefits for Individuals:
Expanding the Affordable Care Act’s premium tax credit so that health coverage costs would be capped at 8.5% of a family’s income.
Expands access to ABLE account for individuals with disabilities.
Repeal of the $10,000 cap on state and local tax deductions.
Provides residential renewable-energy-related tax credits and restores the electric vehicle tax credit.
Benefits for Individuals “Just Starting Out”:
Reestablishing the First-Time Homebuyers’ Tax Credit, which would provide up to $15,000 for first-time homebuyers. The credit would be refundable and advanceable in order to assist buyers at the time of purchase.
Creating a refundable renter’s tax credit capped at $5 billion per year, aimed at holding rent and utility payments at 30% of monthly income for taxpayers who don’t qualify for other assistance.
Student debt forgiveness would no longer be considered taxable income and generous payment-deferral rules would be enacted.
Benefits for Families:
For 2021, there would be an increase in the Child Tax Credit (CTC) from $2,000 to $3,000 for children 17 or younger, while providing a $600 bonus credit for children under 6. The CTC would also be made fully refundable. This change will likely be included in Biden’s economic stimulus package and may even include advanced payments.
The maximum Child and Dependent Care Tax Credit (CDCTC) for childcare costs would increase from $3,000 in qualified expenses to $8,000 ($16,000 for multiple dependents). and increases the maximum reimbursement rate from 35% to 50%.
Benefits for the Elderly:
Expanding the Earned Income Tax Credit (EITC) for childless workers aged 65 or older.
Increasing tax benefits for elderly Americans who pay for long-term health insurance with their retirement savings.
Additional Tax for Higher Income Earners(Wages over $400,000):
The top individual federal income tax rate would rise from 37% to the pre-Trump rate of 39.6%.
Individuals earning $400,000 or more would pay additional payroll taxes. The taxes would be evenly split between the employee and employer for a total of 12.4%. Wages that are between $137,700 and $400,000 would not be taxed, creating a “donut hole” for Social Security taxes.
The “carried interest” loophole would disappear and taxpayers whose income exceeds $1 million would pay tax at ordinary rates of up to 43.4% on investment income (long-term capital gains and qualified dividends) rather than the current top capital gains rate of 23.8%.
Enacting limits how much taxpayers can claim on itemized deductions for taxable incomes above $400,000. The tax benefit would be capped at 28% of value.
Restoring the Pease limitations on select itemized deductions.
Phases out the qualified business income deduction for filers with taxable income above $400,000.
Adjustments to Retirement Planning and Wealth Management:
Equalizing the tax benefits of traditional retirement accounts (such as 401(k)s and individual retirement accounts) by providing a refundable tax credit in place of traditional deductibility. The credit would be automatically deposited into the taxpayer’s retirement account as a 26% matching contribution for every $1 contributed.
High-income taxpayers could simultaneously see a reduced credit savings for retirement contributions.
The estate tax exemption would be cut in half – restoring the rate and exemption to 2009 levels.
Eliminating the step-up in basis on death for capital gains taxation – creating a tax burden at all income levels.
Information current as of January 27, 2021