2020 Presidential Election: Where Do the Presidential Candidates Stand on Taxes?

The TCJA lowered the top rate to 37%, with an additional 0.9% Medicare tax levied on earned income greater than $250,000 for joint filers.

The Democratic candidate wants to raise the highest individual rate to 39.6% (pre-TCJA level); no taxpayer making less than $400,000 would have their taxes raised.

No specific second-term proposals have been released yet, but it is assumed that the administration will advocate the permanent extension of the current law.

The TCJA repealed the Pease limitation that reduced the benefit for certain deductions among high income earners.

The tax benefit would cap at 28% of value, which means that taxpayers with marginal tax rates higher than 28% would face limitations. The Pease limitation would be reinstated for taxpayers whose incomes are over $400,000.

No specific second-term proposals have been released yet, but it is assumed that the administration will advocate the permanent extension of the current law.

Long-term capital gains (LTCG) and qualified dividends are taxed at 20%; an additional 3.8% net investment income tax applies to high earners.

LTCG and qualified dividends would be taxed at the ordinary income rate of 39.6% on incomes above $1 million.

No specific second-term proposals have been released yet, but it is assumed that the administration will advocate the permanent extension of the current law.

Employers and employees each pay 6.2% on the first $137,700 of an employee’s earnings (2020 cap, indexed annually for inflation).

The Social Security payroll tax would be applied to earnings over $400,000.

No specific second-term proposals for payroll taxes.

The highest tax rate of 40% is applied to taxable estates over $1 million, with a current exclusion of $11.58 million, adjusted annually.

Would eliminate the step-up in basis at death. Biden has not specified whether capital gains would be carried over or taxed at death.

No specific second-term proposals have been released yet, but it is assumed that the administration will advocate for a permanent extension of the current law.

Under section 199A, qualified business profits are subject to a 20% deduction through 2025.

The deduction phases out for filers with taxable income above $400,000.

No specific second-term proposals have been released yet, but it is assumed that the administration will advocate a permanent extension of the current law.

Parents with children under the age of 13 and taxpayers who have a disabled dependent can claim a credit of up to 35% of maximum allowable expenses—$3,000 for one dependent and $6,000 for two or more.

The credit would increase to 50%, and the maximum allowable expense would increase to $8,000 ($16,000 for multiple dependents); the credit would be refundable for those with no tax liability.

No specific second-term proposals for the credit have been proposed.

The original temporary credit — enacted during the Great Recession to kickstart the housing market — has expired.

The credit would be $15,000 and permanent (the original credit was up to $8,000).

No specific second-term proposals for credit have been proposed.

The TCJA reduced the rate to 21% from 35% in 2017.

The top corporate income tax rate would increase to 28%, and a 15% minimum tax would be imposed on certain companies’ book income.

Since the rate reduction in the TCJA is permanent, no additional proposal has surfaced.