September 25, 2020

Biden Tax Policy: What You Need to Know

The November election is right around the corner and Joe Biden is looking increasingly more likely to win the election. Thus, it’s time to educate yourself on the Biden Tax Policy. If he were to win, you should expect some significant changes in the tax code which are aimed squarely at the wealthy. What exactly does he want to change?

  • Social Security taxes would kick in for W-2 earnings above $400,000. This means an additional 6.2% owed by the employee AND an additional 6.2% owed by the employer for wages above $400K. Currently, Social Security taxes are only assessed on wages up to $137,700.
  • The top income tax rate would increase to 39.6% from its current 37% rate.
  • The Corporate tax rate would increase to 28% from its current 21% rate.
  • The Biden Tax Policy would cap itemized deductions at 28% of Adjusted Gross Income (AGI)
  • The Child Tax credit would increase from $2,000 to $4,000
  • He would create a first-time homebuyer tax credit of up to $15,000, as well as a tax credit for renters.
  • Long-Term capital gains would be taxed as ordinary income for those with taxable income of greater than $1 million. That would mean a tax rate of 39.6%, compared to the current combined rate of 23.8% for these taxpayers.
  • A 26% refundable tax credit for contributions to qualified retirement accounts (IRA, 401(k), 403(b), etc.). The tax credit would come in the form of a matching contribution.

Under the Biden Tax Policy, if your AGI is below $400K, you will see an average decrease of 0.9% in after-tax income. If your AGI is above $400K, you will see a 17.7% drop in your after-tax income. These figures are averages for both populations per a budget model from the Penn Wharton School of Business.

With higher taxation comes an increased need for strategic tax planning. You shouldn’t wait until the tax code changes to start building a tax plan. There are many things you can do now, in expectation of higher tax rates, to achieve the most favorable tax treatment possible. Contact us now to build your own customized tax plan so that you’re not a victim of the Biden Tax Policy.

And, if you haven’t subscribed to our weekly videos (This Week This Morning), the time has come. Head over to to subscribe to the weekly videos that keep you up to date on the most important developments for your business and your taxes.

About Dark Horse CPAs

Dark Horse CPAs provides integrated tax, accounting, and CFO services to small businesses and individuals across the U.S. The firm was founded to save small businesses (and their owners) from subpar accounting and tax services and subpar client experiences. These small businesses are Dark Horses among their larger and more well-known competition. Being a Dark Horse CPA means advocating for small businesses by bringing them the tax strategies and accounting insights previously reserved for big business. Get a quote today.

Rotating wordsDark Horse logo

Get a personable & experienced CPA who will partner with you to achieve unparalleled results.

Get Started

Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The Dark Horse Advisor's website and its associated links offer news, commentary, and generalized research, not personalized investment advice. Nothing on this website should be interpreted to state or imply that past performance is an indication of future performance. All investments involve risk and unless otherwise stated, are not guaranteed. Be sure to consult with a tax professional before implementing any investment strategy. Investment Advisory Services offered through Dark Horse Advisors, LLC, an Investment Advisor registered with the State of Nevada. Registration does not imply a certain level of skill or training. 

Certain Investment Adviser Representatives of Dark Horse Advisors, LLC are dually registered with DFPG Investments, LLC as Registered Representatives of the broker-dealer and Investment Adviser Representatives of the Registered Investment Adviser. Securities offered through DFPG Investments, LLC member FINRA/SIPC.