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How would President Biden change the tax code?
Campaign Proposals | FY22 Budget Proposals | FY23 Budget Proposals** |
Individual income tax rates and brackets | ||
| Restore the top individual income tax rate to 39.6 percent | Similar (AFP) | Similar |
| Repeal the tax cuts from the Tax Cuts and Jobs Act for people with income above $400,000 | No proposal | No proposal |
Capital gains, dividends, and interest income | ||
| Tax capital gains at the same rate as ordinary income for taxpayers with over $1 million in income | Tax capital gains at the same rate as ordinary income (39.6 percent or 43.4 percent including the net investment income tax) for taxpayers with over $1 million in adjusted gross income, effective April 28, 2021 (AFP) | Similar, effective on or after date of enactment |
| Tax capital gains on assets still held by taxpayers when they die | Tax capital gains in excess of $1 million (plus $250,000 for capital gains on personal residence) on assets still held at death; gains from family-owned businesses and farms would be exempted if heirs run the business (AFP) | Similar but threshold increased from $1 million to $5 million |
| No proposal | No proposal | Impose a minimum tax of 20 percent on total income, inclusive of unrealized gains, of taxpayers with net wealth above $100 million |
| Eliminate certain tax preferences for real estate investors with over $400,000 of income | Repeal of deferral of capital gains tax on like-kind exchanges for gains greater than $500,000 (AFP) | Similar |
| No proposal | Repeal the preferential tax treatment of carried interest if the taxpayer's taxable income is over $400,000. Income from an investment partnership would be taxed as ordinary income and subject to self-employment taxes (AFP) | Similar |
| No proposal | No proposal | Extend the period for the IRS to assess taxes on gains deferred by investment in Qualified Opportunity Funds if taxpayer fails to report those gains on return |
Exemptions, deductions, and credits | ||
| Extend the Earned Income Tax Credit to workers age 65 and older without qualifying children | Similar and also increase credit for workers without qualifying children and lower age requirements to 19 (24 for students attending school at least half-time and 18 for former foster children and homeless youth) (One-year expansion of credit enacted in ARP; AFP would make expansion permanent) | No proposal |
| Expand the Child and Dependent Care Tax Credit to cover up to 50 percent of qualifying expenses of up to $8,000 for one child and $16,000 for two or more children, extend eligibility for the maximum credit to taxpayers with income under $125,000, phase down the credit as income rises above $125,000, and make the credit refundable | Similar and also phase the credit down to zero once income reaches $438,000 and strengthen administration (One-year expansion enacted in ARP; AFP would make expansion permanent) | No proposal |
| Create a $5,000 tax credit for informal caregivers of people who have certain physical and cognitive needs | No proposal | No proposal |
| Temporarily expand the Child Tax Credit to increase the maximum amount to $3,600 for each child under the age of 6 and $3,000 for each child ages 5 through 17, make the credit fully refundable, allow people to receive a portion of the credit each month | Similar: one-year expansion enacted in ARP; AFP would extend increased credit amounts through 2025 and make the credit fully refundable permanently | No proposal |
| Expand Economic Impact Payments to extend coverage to dependents over age 16, provide additional payments as needed during the pandemic, and simplify the application process | ARP authorized one round of payments of $1,400 per person, available to all dependents regardless of age; no further rounds proposed | No proposal |
| Cap itemized deductions at 28 percent of value for taxpayers with over $400,000 of income | No proposal | No proposal |
| Increase tax benefits for older Americans who purchase long-term care insurance using their retirement savings | No proposal | No proposal |
| Increase tax preferences for middle-income taxpayers’ contributions to 401(k) plans and individual retirement accounts | No proposal | No proposal |
| Allow caregivers to make tax-preferred contributions to retirement plans to make up for periods they are not in the formal labor market | No proposal | No proposal |
| Provide automatic access to a 401(k) for most workers who do not have a pension or 401(k)-type plan | No proposal | No proposal |
| Expand eligibility for hardship withdrawals from retirement savings to include survivors of domestic abuse and sexual assault; allow survivors to take distributions from retirement savings without tax penalties | No proposal | No proposal |
| Restore the full electric vehicle tax credit, target it to middle-income consumers, and prioritize the purchase of American-made vehicles as much as possible | No proposal | No proposal |
| Reinstate tax credits for residential energy efficiency | Increase and extend the Residential Energy Efficiency property tax credit, beginning to phase-out in 2027 and reaching zero in 2031 (AJP) | No proposal |
| Create a refundable tax credit of up to $15,000 for down payments available to first-time home buyers and payable when taxpayers purchase their home | No proposal | No proposal |
| Create a refundable renter’s tax credit that would be equal to the difference between 30 percent of recipients’ income and the lower of their rent or the Small Area Fair Market Rent; the total amount of credits across all recipients would be capped at $5 billion a year | No proposal | No proposal |
| Expand income-based repayment for undergraduate federal student loans; exempt forgiven student loans from taxable income | Excludes certain student loan amounts forgiven from 2021 through 2025 from gross income | Make permanent the ARP exclusion of forgiven student loans from gross income |
| No proposal | Provide federally subsidized state and local bonds for school and transportation infrastructure (AJP) | No proposal |
| No proposal | No proposal | Make the adoption tax credit fully refundable and available to certain legal guardians |
| No proposal | No proposal | Limit the value of depreciation deductions for certain depreciable real property, except for taxpayers with less than $400,000 of adjusted gross income |
| No proposal | No proposal | Limit a partner's deduction for certain syndicated conservation easement contributions made by partnerships |
Payroll tax | ||
| Increase the Social Security earnings cap | No proposal | No proposal |
| No proposal | Apply the 3.8 percent Medicare tax consistently to all taxpayers earning over $400,000 (AFP) | No proposal |
| Temporarily waive experience rating used for the computation of Unemployment Insurance taxes when companies use Short-Time Compensation—federal subsidies for businesses that reduce their workers’ hours rather than laying off some employees. | No proposal | No proposal |
Health | ||
| Extend eligibility for premium tax credits to taxpayers with income above 400 percent of the federal poverty level; lower the limit on the cost of coverage from 9.86 percent of income to 8.5 percent | Similar provisions in ARP would be made permanent; would also repeal indexation of applicable contribution percentages after 2022 (AFP) | No proposal |
| Calculate premium tax credits based on the cost of a gold plan rather than a silver plan | No proposal | No proposal |
| Allow businesses to deduct the cost of emergency paid sick leave against expected tax payments, or seek reimbursement for paid sick leave, during the coronavirus outbreak. | Allow employers with up to 500 employees, certain governmental employers, and self-employed individuals to claim a refundable tax credit against the employer's share of Medicare tax payments for the cost of providing COVID-related paid sick and family leave between April 1, 2021 and September 30, 2021 (ARP); no proposal yet for period beyond September 30 | No proposal |
| Institute a refundable tax credit to reimburse businesses and nonprofits for the extra costs of providing employees with full health benefits during periods of a reduction in work hours | Similar provision included in ARP, expiring September 30, 2021; no proposal yet for period beyond September 30 | No proposal |
Business taxes | ||
| Increase the top corporate income tax rate to 28 percent | Similar (AJP) | Similar |
| Impose a 15 percent minimum tax on companies’ book income with credit for taxes paid to other countries; allow companies to carry over losses from nonprofitable years | Impose a 15 percent minimum tax on book profits for companies with income of at least $2 billion. Allow foreign tax credits and major US business tax credits, and allow companies to carry over losses (AJP) | No proposal |
| Impose a 10 percent surtax on income from the sales of goods produced abroad by a US company and sold in the United States | No proposal | No proposal |
| Replace the current Global Intangible Low-Tax Income (GILTI) tax with a country-by-country minimum tax on the earnings of foreign subsidiaries of US multinationals at a rate of 21 percent; eliminate the 10 percent of qualified business asset investment exclusion | Similar, and disallow deductions attributable to exempt income (AJP) | Assumes passage of GILTI reforms in BBBA, which would align the US regime with the OECD/G-20 BEPS Pillar Two global minimum tax. The BBBA reform would reduce the GILTI deduction from 50 percent to 28.5 percent, increasing the effective tax rate to 15 percent; lower the qualified business asset investment exclusion from 10 percent to 5 percent and the foreign tax credit "haircut" from 20 percent to 5 percent; and limit pooling of foreign profits, losses, and tax credits to a country-by-country basis. |
| No proposal | Repeal the base erosion and anti-abuse tax (BEAT) and deny deductions to foreign corporations on payments that would allow them to shift profits out of the United States if they are based in a country without a foreign minimum tax (AJP) | Repeal the BEAT and replace it with an Undertaxed Profits Rule (UTPR) to align the US corporate tax with BEPS Pillar Two. The UTPR would disallow deductions to US affiliates of large foreign corporations who are taxed at effective rates below 15 percent and allow the US to impose a domestic "top-up" tax on income that would otherwise be subject to a foreign UTPR. |
| No proposal | No proposal | Apply information disclosure rules to expanded definition of a foreign business entity, with new definition including any taxable unit in a foreign jurisdiction; broader definition needed for enforcement of jurisdiction-by-jurisdiction taxable unit standards under GILTI, Subpart F, and foreign tax credit. |
| No proposal | Modify foreign oil and gas extraction income and foreign oil-related income rules; also modify tax rule for dual-capacity taxpayers (AJP) | No proposal |
| No proposal | Limit foreign tax credits for sales of hybrid entities (AJP) | No proposal |
| No proposal | Restrict deductions of excessive interest of members of financial reporting groups for disproportionate borrowing in the United States (AJP) | No proposal |
| Deny deductions and expensing of costs incurred from moving certain jobs or production outside the United States | Similar, and provide a tax credit to support onshoring jobs in the United States (AJP) | Similar |
| Tighten anti-inversion rules, making it more difficult for US multinational corporations to avoid US taxes through certain types of mergers with foreign corporations | Similar (AJP) | No proposal |
| No proposal | Repeal deduction allowed for Foreign Derived Intangible Income (FDII) (AJP) | No proposal |
| No proposal | Permanently extend the current limitation that restricts the use of large, excess business losses (AFP) | No proposal |
| No proposal | No proposal | Prevents basis-shifting by related parties through partnerships. |
| No proposal | No proposal | Change the definition of control test applied to most corporate tax provisions to match the affiliation test used for affiliated groups, where control is defined as ownership of at least 80 percent of voting power and 80 percent of total stock value of the corporation |
| No proposal | No proposal | Allow taxpayers to make a retroactive qualified electing fund election for distributions from passive foreign investment companies (PFIC) under specific conditions |
| Create a Made in America tax credit, payable in advance, for up to 10 percent of qualifying investments in manufacturing and certain services in the United States; the credit could also apply to incremental increases in payroll for US jobs in manufacturing | No proposal | No proposal |
| Expand the new markets tax credit to permanently provide $5 billion in support each year | Similar (AJP) | Similar |
| Establish a new manufacturing communities tax credit and target it toward communities that experience mass layoffs or the closure of a major government institution; fund the credit for five years | No proposal | No proposal |
| Establish incentives for investors to partner with nonprofits and community organizations to create jobs and improve households’ financial circumstances in opportunity zones | No proposal | No proposal |
| Create new incentives, including tax credits, to encourage domestic production of designated critical products, such as semiconductors | Similar (AJP) | No proposal |
| Expand tax deductions for energy technology upgrades, smart metering systems, and other emissions-reducing investments in commercial buildings | Similar (AJP) | No proposal |
| Impose a carbon adjustment fee against countries that do not meet certain climate and environment standards | No proposal | No proposal |
| Develop a low-carbon manufacturing sector by providing tax credits for businesses to upgrade their equipment and processes, investing in factory construction and expansion, and deploying low-carbon technologies | Restore and expand the Advanced Manufacturing Tax Credit (48C) offering $10 billion of investment tax credits for qualifying manufacturing activities (AJP) | No proposal |
| Eliminate tax preferences for fossil fuels | Similar (AJP) | Similar |
| Enhance tax incentives for carbon capture, use, and storage | Similar (AJP) | No proposal |
| Extend Investment Tax Credit for clean energy generation and storage. | Extend and expand the Renewable Energy Investment Tax Credit and extend the Renewable Energy Production Tax Credit, phasing out both measures beginning in 2027 and reaching zero by 2031 (AJP) | No proposal |
| No proposal | Extend and expand production tax credits for energy-efficient homes (Section 45L) and commercial buildings (Section 179D). | No proposal |
| No proposal | Create new investment tax credits for electricity transmission and insulation. | No proposal |
| No proposal | Create new production tax credits for low-carbon aviation fuel, hydrogen, and nuclear energy from existing facilities. | No proposal |
| No proposal | Provide a new nonrefundable credit of up to $5,000 for qualified disaster mitigation expenditures by homeowners and businesses (AJP) | No proposal |
| Create a tax credit to cover 50 percent of up to $1 million of a business's costs of constructing a child care center at a workplace for their employees | Similar; increase existing credit (AFP) | No proposal |
| Offer tax credits to small businesses to offset the costs of workplace retirement plans | No proposal | No proposal |
| Tighten the rules for classifying independent contractors; increase penalties for misclassification | No proposal | No proposal |
| End pharmaceutical companies’ tax deduction for advertisement spending | No proposal | No proposal |
| Impose a tax penalty when pharmaceutical companies increase the costs of their brand-name, biotech, and generic drugs by more than the inflation rate | No proposal | No proposal |
| Expand the low-income housing tax credit by $10 billion over 10 years | Create new pool of opportunity housing credit amounts for allocation to difficult development areas or low-poverty areas | Expand the low-income housing tax credit for projects, financed by Qualified Private Activity Bonds, in difficult development areas or low-poverty areas |
| Establish a tax credit to help finance the costs of rehabilitating properties in distressed neighborhoods | Establish Neighborhood Homes Investment Tax Credit for costs of building and rehabilitating homes in distressed neighborhoods (AJP) | No proposal |
| Restore the full electric vehicle tax credit, target it to middle-income consumers, and prioritize the purchase of American-made vehicles as much as possible | Provide business tax credit for new medium- and heavy-duty zero-emission vehicles (AJP) | No proposal |
| No proposal | Extend and enhance tax credit for electric vehicle charging stations through December 31, 2026 (AJP) | No proposal |
| No proposal | No proposal | Establish an untaxed income account regime for certain small insurance companies; expand the pro rata interest expense disallowance for business-owned life insurance contracts; and correct drafting errors related to insurance companies in 2017 tax act |
Estate and wealth taxes | ||
| Restore the 2009 estate tax levels | No proposal | No proposal |
| No proposal | No proposal | Limit the ability of taxpayers to use Grantor Retained Annuity Trusts (GRATs) to reduce estate and gift tax liabilities |
| No proposal | No proposal | Require consistent valuation of promissory notes, effective for valuations on or after date of introduction |
| No proposal | No proposal | Expand definition of executor, increase limit on reduction in value of special use property, and changes in enforcement |
| No proposal | No proposal | Provide that "generation-skipping transfers" would apply only to direct skips and taxable distributions to beneficiaries no more than two generations younger than the transferor and to other younger generations alive at creation of trust |
Excise and consumption taxes | ||
| No proposal | Reinstate Superfund excise taxes at double previous rates from 2022 through 2031 and extend to other crude products (AJP) | Assuming reinstatement of Superfund excise tax as proposed in BBBA, eliminate exemption for exported products and extend tax on crude oil and imported petroleum to other crude products |
| No proposal | No proposal | Clarify that the last domestic purchaser of exported diesel fuel and kerosene is entitled to fuel excise tax rebates |
Digital Assets | ||
| No proposal | No proposal | Provide that securities loan nonrecognition rules apply to certain loans of actively traded digital assets recorded on cryptographically secured distributed ledgers |
| No proposal | Expand scope of information reporting by brokers who report on crypto assets to include reporting on certain beneficial owners of entities holding accounts with broker; also would require brokers to report information on certain passive entities and their substantial foreign owners with respect to crypto assets held by those entities in accounts with broker | Similar, also expands information reporting requirements by some financial institutions to report account balances in US offices that are held by foreign individuals |
| No proposal | No proposal | Expand requirement that US taxpayers report specified foreign financial assets with an aggregate value of at least $50,000 to include foreign digital asset accounts maintained by foreign digital asset exchanges or service providers |
| No proposal | No proposal | Allow dealer or trader to use mark-to-market method of accounting for certain digital assets |
Tax Administration | ||
| Take action to increase tax compliance among high-income taxpayers | Increase IRS funding by $80 billion over ten years for auditing high-income taxpayers, large businesses, and estates; providing additional resources for enhancing its information technology; and strengthening customer service (AFP) | No proposal |
| Establish a financial risk fee on certain liabilities held by financial institutions with more than $50 billion in assets | No proposal | No proposal |
| No proposal | Require banks and other institutions to report deposits and withdrawals on all accounts with a gross flow of at least $600 (AFP) | No proposal |
| No proposal | Give the IRS authority to regulate and establish minimum competency standards for paid preparers and penalize those who do not sign tax returns (AFP) | Similar, also increase other penalties related to tax preparation and electronic filing |
| No proposal | Improve information reporting for payments subject to backup withholding (AFP) | Similar |
| No proposal | Extend statute of limitation for listed transactions, and impose liability on shareholders to collect unpaid income taxes of applicable corporations (AFP) | Similar |
| No proposal | Modify tax administration rules by modifying centralized partnership audit regime and rules about supervisory approval of penalties (AFP) | Similar but dropped provision about supervisory approval of penalties |
| No proposal | No proposal | Require taxpayers to affirmatively disclose a position on a tax return that is contrary to a regulation |
| No proposal | No proposal | Require employers to withhold certain taxes from nonqualified deferred compensation included in employee's income when plan is not compliant with tax requirements |
| No proposal | No proposal | Extend statute of limitations for audits if taxpayers omit more than $100 million of income on return |
| No proposal | No proposal | Extend statute of limitations for assessment of taxes from individuals renouncing US citizenship or permanent residency status and allow for relief from rules for certain lower-income dual citizens; simplify foreign exchange rules; and simplify foreign tax credit rules |
Other | ||
| No proposal | No proposal | Tighten requirements for qualified distributions to donor-advised funds |
*ARP is the American Rescue Plan Act, enacted March 11, 2021
AJP is the American Jobs Plan, announced on March 31, 2021
AFP is the American Families Plan, announced on April 28, 2021
BBBA is the Build Back Better Act, as passed by House of Representatives on November 19, 2021
** The revenue provisions in President Biden’s FY 2023 budget are estimated relative to a baseline that assumes passage of the revenue provisions in the BBBA. The baseline also includes the revenue provisions in the Infrastructure Investment and Jobs Act, signed into law on November 15, 2021.
Source:
"An Updated Analysis of Former Vice President Biden's Tax Proposals." Tax Policy Center, November 6, 2020.
H.R. 1319, "The American Rescue Plan Act of 2021." 117th Cong. (2021).
"Fact Sheet: The American Jobs Plan." White House Briefing Room, March 31, 2021.
"Fact Sheet: The American Families Plan." White House Briefing Room, April 28, 2021.
"Budget of the U.S. Government: Fiscal Year 2022." White House Office of Management and Budget, May 28, 2021.
"General Explanations of the Administration's Fiscal Year 2022 Revenue Proposals." Treasury Department, May 28, 2021.
"General Explanations of the Administration's Fiscal Year 2023 Revenue Proposals." Treasury Department, March 28, 2022.
This page is funded by the Peter G. Peterson Foundation.
