Explore what the U.S. election might mean for your taxes.
This has been a year unlike any other. Not only are Americans navigating the challenges of the current pandemic and widespread social issues, they’re also balancing the responsibility of electing a president come November. That includes keeping an eye on hot-button policy issues. Unsurprisingly, taxes are chief among them. After all, tax levels are key factors of any economy, and COVID-19 has brought unprecedented upheaval to ours.
To better contextualize the tax changes proposed by Democratic presidential nominee and former Vice President Joe Biden, it’s important to revisit December 2017, when President Donald Trump signed the Tax Cuts and Jobs Act – the largest overhaul of the federal tax code in three decades – into law. As a result of the new code, 65% of Americans received a tax cut in 2018, according to the Tax Policy Center, with H&R Block reporting the average tax cut at around $1,200.
While the Trump administration hasn’t yet detailed a plan for the act’s expiring provisions, most of its tax benefits would remain in place at least through 2025. These sunset provisions will need to be extended by Congress to remain effective, which could present an opportunity for additional tax adjustments. However, fiscal concerns and polarized political dynamics in Congress set this up as a political battle and may make it difficult to enact further significant tax changes.
Biden’s tax plan includes a variety of proposals centered on increasing taxes for corporations and high-income earners (those earning $400,000 or more), although he’s unlikely to raise taxes immediately if he’s elected. Instead, this will depend on the state of the economy.
Here’s what else Biden has proposed:
As voters continue weighing their options in preparation for the 2020 election, President Trump’s and Biden’s tax plans are sure to form an increasingly critical part of political discourse.
If you’re a business owner or anticipate that your tax bracket might change in the year ahead, make sure to speak with your financial and tax professionals. They can help tailor a strategy that fits your distinct needs.
Sources: Raymond James Equity Research; budgetmodel.wharton.upenn.edu; nasdaq.com; taxfoundation.org
All expressions of opinion reflect the judgment of Raymond James and are subject to change. There is no assurance the forecasts discussed will be realized.