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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