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With the 2020 presidential election just weeks away and COVID-19 still wreaking havoc on the economy, it’s important for businesses and individuals to understand two candidates’ proposed tax policies. Here is a comparison the Donald Trump and Joe Biden tax plans (as of 10/14/20):
Trump Tax Plan |
Biden Tax Plan |
|
---|---|---|
Corporate Tax Rate |
Maintain 21% |
Raise to 28%Impose a 15% minimum tax on book income so no corporation gets away with paying no taxes |
Pass-Through Entities(1099 Contractors and Limited Liability Companies [LLC] taxed as Sole Proprietors [IRS Form Schedule C], S-Corporations [IRS Form 1120S] and Partnerships [IRS form 1065]) |
Make 20% qualified business income pass-through deduction permanent |
Phase out 20% qualified business income pass-through deduction for taxpayers earning more than $400,000 |
Tax Cuts for Businesses |
Make 100% bonus depreciation permanent“Made in America” Tax CreditsExpand Opportunity Zones |
Double tax rate on Global Intangible Low Tax Income (GILTI) earned by foreign subsidiaries of US firms from 10.5% to 21%Establish a Manufacturing Communities Tax Credit to reduce the tax liability of businesses that experience workforce layoffs or a major government institution closureExpand the New Markets Tax Credit and make it permanentOffer tax credits to small businesses for adopting retirement savings plansExpand renewable energy-related tax credits, including tax credits for carbon capture, use, and storage as well as credits for residential energy efficiency, and a restoration of the Energy Investment Tax Credit (ITC) and the Electric Vehicle Tax CreditImpose a 10% surtax on corporations that “offshore manufacturing and service jobs to foreign nations in order to sell goods or provide services back to the “American market”Establish an advanceable 10% “Made in America” tax credit for activities that restore production, revitalize existing closed or closing facilities, retool facilities to advance manufacturing employment, or expand manufacturing payroll |
Payroll Taxes |
Under the current plan, the 12.4% payroll tax is divided evenly between employers and employees and applies to the first $137,700 of an individual’s income*Trump issued an executive order to temporarily postpone social security tax for employees from Sept. 1 through Dec. 31, 2020. He has indicated he would make this temporary reprieve permanent |
Maintain the 12.4% tax split and the $137,700 cap but apply the Social Security payroll tax on earnings over $400,000 |
Business Energy |
Repeal renewable energy investment creditEliminate accelerated depreciation for renewable energy property |
Reform and extend incentives that generate energy efficiency and clean energy jobsIncentives for carbon capture technologyIncentives for manufacturing facilities making energy-efficient upgrades |
Trump Tax Plan | Biden Tax Plan | |
---|---|---|
Individual Tax Rates |
Maintain 37% and make it permanentNo limit on itemized deductions10% “Middle Class” tax cutReduce 22% tax bracket to 15% |
Raise to 39.6%Cap value of itemized tax deductions at 28% for taxpayers earning more than $400,000 |
Capital Gains |
Maintain maximum capital gains rate at 20%, and maybe lower to 15% |
39.6% on income above $1M |
Estate Tax |
Maintain current “step-up” in asset value and make permanent |
Eliminate “step-up” basis for inherited capital assetsRestore estate tax rates to “historic norms” |
Personal Energy |
Eliminate credits for electric vehiclesRepeal residential energy efficient property credit |
Restore full electric vehicle creditReinstate tax credits for residential energy efficiency |
Child and Dependent Care Tax Credit |
Maintain $3,000 tax credit for one person; $6,000 tax credit for one or more |
Increase credit to $8,000 for one person; $16,000 for two or more |
Child Tax Credit |
Maintain $2,000 tax credit, which $1400 of this credit is refundable, for each child 16 or under, and $500 for dependents other than children 16 or under |
Increase credit to $3,000 for each child ages 6 to 17, and $3,600 for children under 6, making it refundable and advanceable during the Coronavirus crisis |
First-Time Homebuyer Credit |
N/A |
Refundable, advanceable tax credit of up to $15,000 |
Education |
Provide a tax credit for individual and corporate donations to state-authorized organizations that sponsor scholarships |
Exclude forgiven student loan debt from taxable income |
Travel Tax Credit |
Credit up to $4,000 ($8,000 for married couples filing a joint return), plus an additional $500 for each child age 16 or younger for travel-related expenses within the U.S. |
N/A |