Written and reviewed by Brandon VanLandingham, CFA, CMT, CFP® · Last updated February 15, 2023
President Biden’s administration has outlined a tax policy built upon the agenda introduced during his campaign. Biden’s tax plan focuses on raising taxes on corporations and affluent households while increasing credits for moderate- to lower-income households. With Democratic control of Congress, changes outlined in President Biden’s tax plan have an increased possibility of becoming a reality. At what time, in what form, and to what extent remains to be seen; however, another round of tax law changes is likely on the horizon.
Having adapted to frequent, and sometimes major, legislative changes in recent years (namely the TCJA, the SECURE Act, the CARES Act, and most recently, the American Rescue Plan Act), clients are understandably concerned about what changes could be imminent. By familiarizing yourselves with President Biden’s tax plan now, you will be positioned to take action and seize planning opportunities when changes are implemented.
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Frequently Asked Questions
- What are the primary goals of the Biden tax plan?
- President Biden's tax plan seeks to increase taxes on corporations and high-income households while expanding tax credits for middle- and lower-income families. Higher earners may see a return to higher individual income tax rates and changes to capital gains treatments.
- Will individual income tax rates change under the new proposal?
- The plan proposes raising the top individual income tax rate from 37% back to 39.6%, reversing changes made by the Tax Cuts and Jobs Act. This change targets individuals in the highest income brackets.
- How do potential tax law changes affect financial planning?
- Legislative changes often involve adjustments to capital gains rates, estate tax exemptions, and corporate tax levels, all of which require proactive financial planning to manage potential tax liabilities.
