The 2020 presidential election is around the corner, with many states already beginning early voting. Now that the October 15th extended deadline is behind us, many taxpayers are focusing on year-end planning. To help our clients understand what tax changes may occur in the not-too-distant future, we have outlined the various tax policy positions of the two presidential candidates.
Please note that HBK does not support or endorse any political candidates, and this information is being provided for tax planning purposes only. We encourage you to reach out to your HBK advisor to determine what impact these proposals may have on your tax situation.
| Tax Matter | Joe Biden (D) | Donald Trump (R) |
|---|---|---|
| Individual Taxes | Increase to the top tax rate to 39.6% for Taxpayers making more than $400,000 | Potential extension of the 2017 TCJA provisions beyond the sunset date of 2025 and potentially providing a 10% middle class tax cut |
| Expansion of the Dependent Care Credit, increasing the credit to $8,000—a refundable credit that could provide at maximum 50% of dependent care costs—and expansion of the Earned Income Tax Credit to older workers | Expansion of TCJA provisions and additional requirement of providing a valid Social Security Number to claim various tax credits | |
| Elimination of SALT cap from TCJA, and cap itemized deductions at 28% | Expansion of TCJA provisions that eliminated itemized deductions beyond 2025 sunset date | |
| Business Taxes | Increase in tax rate to 28% with a 15% minimum tax on companies reporting more than $100 million in the US but currently reporting $0 or negative federal income tax | No changes |
| Foreign Tax Paid credit and carryovers allowed | No known plan | |
| Expansion of the work opportunity credit to include military spouses; additional 10% “Made in America” tax credit available to companies that create jobs for American workers or revitalize closed or nearly closed facilities or expand | No known plan | |
| Reversal of TCJA provisions with regard to depreciation deductions | Expansion of TCJA beyond sunset date of 2025 | |
| Modification of Qualified Business Income Deduction rules created under the TCJA including rules for real estate investors | No known plan | |
| Environmental Tax | Potential support for Carbon Tax | Blocked carbon capture efforts |
| End fossil fuel subsidies | Supports tax breaks for fossil fuel companies | |
| Restoration of full electric vehicle tax; reinstatement of various eliminated tax credits; expansion of deductions for energy retrofits, smart metering systems or other emission-reducing investments to qualifying buildings; reinstatement of Investment Tax Credit. | No known plan | |
| Real Estate | End qualified business income deduction for real estate investors | Expansion of TCJA provisions beyond sunset date of 2025 |
| Modifications to like-kind-exchange provisions | No known plan | |
| Creation of refundable credit of up to $15,000 for first-time home buyers | No known plan | |
| Creation of tax credits to incentivize renovating distressed properties as part of the general business credit | No known plan | |
| Creation of renters tax credit | No known plan | |
| Estate Tax | Elimination of step-up basis provisions allowing capital gains to be passed to heirs after death without tax | Expansion of TCJA provisions beyond sunset date of 2025 |
| Financial Transactions | Elimination of carried interest | Elimination of carried interest |
| No known position on cryptocurrency | Publicly indicated does not support cryptocurrency | |
| International Taxation | Raise minimum Global Intangible Low-Taxed Income rate to 21% and tighten anti-inversion rules End certain incentives created under TCJA which allow multinationals to lower taxes on foreign earned income; establish a claw-back provision requiring a company to return public tax benefits when they close American processes and move jobs overseas |
Expansion of TCJA provisions beyond sunset date of 2025 |
| Tax Enforcement | No specific plan announced | Require valid Social Security Number for work if attempting to claim various tax credits; increase wage and information reporting; provide IRS authority to correct errors on tax returns prior to issuing refunds |
| Compensation and Benefits | Implementation of provisions to ensure proper classification of employees as employees as opposed to independent contractors to avoid paying employment taxes | Executive Order provided optional deferment of payroll taxes through 12/31/2020 for eligible employees; no confirmation of how or if order would be expanded to 2021 |
| Increase base cap on high earners for social security | No position | |
| Creation of “automatic 401k” for eligible workers who do not have access to pension of 401k plans; allow for hardship withdrawal for survivors of domestic violence or sexual assault; allow “catch-up” contributions to retirement accounts from caregivers | Expansion of TCJA past sunset date of 2025 | |
| Student Loans | Comprehensive plan to cancel student loans held by the federal government, tax-free, after income-based repayments have been entered into for 20 years | Supports passage of School Choice Legislation providing $5 billion a year on tax credits for donations to private school scholarships Renewal of the TCJA provisions |
| Health Care | Eliminate 400% income cap on tax credit eligibility for the premium tax credit Impose tax penalty on drug manufacturers that increase the cost of their brands, or abusively price generic medications beyond the general inflation rates Create $5,000 tax credit for use of informal caregivers including family members Increase tax benefits to older Americans who purchase long term care insurance |
Repeal Affordable Care Act |
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