Six Possible Post-Election Tax Law Changes
President-elect Joe Biden’s tax plan is more moderate than the proposed plans of some of the other Democratic primary candidates but less conservative than the Tax Cuts and Jobs Act of 2017 of President Trump. A Columbia, Maryland tax attorney can help you strategize for the future tax situation and help you understand these six possible post-election tax law changes.
Increased Tax Credits for Hiring People with Disabilities
Biden’s tax plan includes increasing the tax credits for hiring people with disabilities, up to $5,000 the first year and $2,500 the second year of the disabled worker’s employment. Also, a company can get up to $30,000 in tax credits for making their workplace more accessible. All employers are eligible for these tax changes, even small businesses.
Opportunity Zone Program Reforms
Opportunity Zone programs allow people to defer capital gains from selling personal or business property if they invest the sales proceeds in qualified opportunity funds (QOP). QOP funds then get invested in communities with economic challenges, but seldom for affordable housing or local business development.
Biden wants to reform Opportunity Zone programs by creating tax incentives for QOFs that partner with community-focused organizations and non-profits, particularly those that create jobs for low-income residents. QOFs would have to file public accounting and disclosures on how their investments have helped local residents.
Changes in Corporate Taxes
Before the 2017 tax changes, the corporate tax rate was 35 percent. The 2017 changes lowered the rate to 21 percent. Biden’s plan would raise the corporate tax rate to 28 percent. The plan would also impose a minimum tax rate of 15 percent for large corporations. Biden’s tax proposals would create new tax breaks for certain industries that create local jobs and bring work back to the United States.
Increased Taxes on High-Income Taxpayers
Biden’s tax plan does not increase the taxes for people making less than $400,000. He proposes taking the highest tax rate on personal income back up to 39.6 percent, which is the maximum before the 2017 tax changes. The current tax rate cap is 37 percent.
High-income people get a 20 percent deduction for qualified business income. Biden’s tax plan would phase out this deduction. Another possible tax change is a cap on itemized deductions for high-income individuals.
Tax Breaks for Low-Income and Middle-Income Taxpayers
Biden wants to forgive student loan debt, which would improve the financial stability for many people struggling under the burden of massive loan balances. This measure purportedly would allow people in their thirties to move out of their parents’ homes, rent or buy their own homes, and have purchasing power for furniture, appliances, and countless other items that would stimulate the economy.
During the coronavirus pandemic, parents could get a temporary increase in the child tax credit of $3,600 for each child younger than six years and $3,000 for each child between the ages of six and 17. The child and dependent care tax credit would increase to $8,000 per child, with a maximum of $16,000. These changes would be payable in advance and refundable.
Biden wants to forgive student loan debt, which would improve the financial stability for many people struggling under the burden of massive loan balances.
Tax Changes About Health Care
Unlike some other Democrats who campaigned on a platform that included “Medicare for all,” Biden wants to expand Obamacare. He would provide tax benefits that would make it more affordable for people to buy coverage through a health insurance exchange program.
Drug companies will face a tax penalty if they increase the price of prescription medications more than the rate of inflation. Pharmaceutical corporations will lose their tax advantages if they move their manufacture outside of the United States.
These are but a few of the possible tax changes that could go into effect post-election. A Columbia, Maryland business tax attorney can explain these and other potential ways that doing business might be different going forward.
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