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Photograph depicting the exterior of a government building - Biden's Tax Agenda

Inside Biden’s Tax Agenda: A Closer Look at Proposed Changes

President Biden’s recent State of the Union address on March 7, 2024, shed light on his proposed tax agenda, aiming to bring significant changes to taxation for large businesses, investors, and the ultra-rich. Here’s a breakdown of the key proposals outlined:

1. Capital Gains Tax Increase

President Biden proposed raising the base rate for capital gains tax to 39.6% for individuals with taxable incomes of at least $1 million. This substantial increase, up from the previous maximum of 20%, aims to generate revenue from the wealthiest Americans.

2. Medicare Tax Adjustment

Another notable proposal is the adjustment of the Medicare tax from 3.8% to 5% for individuals earning over $400,000. This increase is intended to bolster funding for healthcare programs.

3. Minimum Tax for Ultra-Wealthy Families

The tax agenda includes a minimum tax rate of 25% for families with a net worth of $100 million or more. This provision aims to ensure that even the wealthiest families contribute their fair share to federal revenues.

4. Changes to Personal Income Tax

President Biden seeks to raise the top personal income tax rate to 39.6% for individuals earning more than $400,000 ($450,000 for joint filers). This adjustment targets high-income earners and aims to redistribute wealth more equitably.

5. Corporate Tax Reforms

The proposal entails an increase in the federal corporate tax rate from 21% to 28%. Additionally, there’s a plan to raise the domestic corporate minimum tax from 15% to 21%. These changes aim to ensure that corporations contribute their fair share to government revenues.

6. Limitations on Inheritance Basis Step-Up

President Biden proposes limiting the inheritance basis step-up to $5 million per individual or $10 million for married couples, a significant departure from the current unlimited provision.

7. Employee Compensation Deduction Limitation

The proposal includes a limitation on corporations’ deductions for employee compensation to $1 million. This provision aims to address income inequality and excessive executive compensation.

8. Changes to Real Estate and Digital Asset Taxes

Notable changes include capping the deferral of real estate gains through Section 1031 exchanges at $500,000 and subjecting digital asset sales to wash sale rules akin to those applied to stock sales.

9. Enhancements to Tax Credits

Lastly, the proposal seeks to enhance both child and earned income tax credits, providing additional support to low and middle-income families.

To provide further insight and clarity, we’ve also prepared a video summarizing President Biden’s tax agenda. You can watch it below:

President Biden’s tax proposals have sparked discussions and debates across various sectors. Stay updated with our website for future developments and insights on this matter.

With these proposed changes, it’s essential for businesses and individuals alike to stay informed and adapt accordingly. The implications of these tax reforms could significantly impact financial planning and investment strategies. Stay tuned for more updates and analysis on President Biden’s tax agenda.

JS Morlu LLC is a top-tier accounting firm based in Woodbridge, Virginia, with a team of highly experienced and qualified CPAs and business advisors. We are dedicated to providing comprehensive accounting, tax, and business advisory services to clients throughout the Washington, D.C. Metro Area and the surrounding regions. With over a decade of experience, we have cultivated a deep understanding of our clients’ needs and aspirations. We recognize that our clients seek more than just value-added accounting services; they seek a trusted partner who can guide them towards achieving their business goals and personal financial well-being.
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