Results of the Presidential Election on Revenue Taxes – Taxes

United States:

Impact of the Presidential Election on Income Tax

December 09, 2020

Dickinson Wright PLLC

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Now that the presidential election results are in and out

Former Vice President Joe Biden was elected President Biden.

It is important to remember the tax policy changes for individuals

Income taxes from Mr. Biden during his campaign he announced that he

would suggest if chosen. Keep three of these changes

taking into account the likelihood that these proposed changes will take effect

The law will depend in large part on the January results.

2021 runoff elections in the two races of the US Senate in Georgia. If the

The Republican candidate wins at least one of these two seats, the

The Republican Party will retain control of the US Senate and the US Senate

Likelihood of these changes going into effect in 2021

decrease significantly. The ongoing effects of COVID-19

Pandemic affecting the US economy and the need for additional fiscal policies

Incentives could also affect the timing and nature of a tax law

Changes.

Amendment # 1 – Raising Income Tax Rates in the Ordinary Way

income

During his campaign, President-elect Biden announced plans

Increase in income tax rates for the "rich"

by increasing the marginal tax rate for married couples to 39.6%

Taxpayers who file joint income tax returns and who are subject to tax

Income is over $ 400,000. Under current tax laws, that is

The taxable income of jointly married taxpayers is over $ 400,000

taxed at rates of 32%, 35% or 37%. See Table 1 at the

the end of this article for a graph showing 2020 income tax

Tax rates and the possible income tax rates for 2021 if proposed

The increase in marginal tax rates will take effect in

2021.1

Amendment # 2 – Changes to Income Tax Rate for Qualifying Dividends

and capital gains

Another policy change announced by President-elect Biden

pursue is the lifting of the 20% tax rate cap for qualified employees

Dividends and capital gains for taxpayers with taxable income in

Excess of $ 1,000,000. Qualified dividends under applicable law and

Long-term capital gains are taxed at rates of 0%, 15% or 20%.

depending on the taxable income of the taxpayer. For 2020 capital

Profits from married taxpayers who file joint tax returns and who are subject to tax

Income over $ 496,600 is taxed at 20%. Both types of income

(qualified dividends and capital gains) are subject to additional

Taxation at 3.8% (Net Investment Income Tax or NIIT). Mr. Biden

has not announced any plans to repeal or amend the NIIT

originally enacted to pay for health care costs

the Act on Affordable Care.

In addition, Mr. Biden proposed a limit on the individual items

Deductions for taxpayers with a taxable income of 28% and

higher brackets. As noted in Table 1, if this

Change had been in effect for 2020, it would apply to married people

Taxpayers filing joint tax returns with taxable income greater than

$ 326,600.

Amendment No. 3: Increase in income depending on the social situation

Security taxes

President-elect Biden has announced his intention to: a

Change in the amount of income subject to social insurance

Taxes so that earned income from taxpayers becomes over $ 400,000

become subject to social insurance. Earned under current law

Income up to $ 137,700 is subject to Social Security tax2. To the

Self-employed, the social security tax rate is

12.4% with a deduction for half of the social security taxes paid. To the

Employees, employers pay 6.2% and employees pay 6.2%. Social

Security taxes are payable by each taxpayer (and his or her)

Employer) on an individual basis, regardless of the tax return

Taxpayer status. In addition, the income earned is subject to one

Medicare tax of 1.45% with no limit. Mr. Biden hasn't

announced plans to change the current Medicare tax.

In summary, individuals, especially the

"wealthy" should closely monitor the political intrigue

that will follow in the next few months to see if

Your personal income tax planning needs to be changed for 2021

and future years.

If you have any questions about how the proposed tax policy changes

affects your tax planning if so decided by Congress, Dickinson

Wright attorneys are here to help. Contact Ralph for more information

Z. Levy Jr., Esq., 615-620-1733 in Nashville, TN

Bureau or other lawyer of Dickinson Wright PLLC who is part of

the company's Tax Practice Group.

Footnotes

1.

The tax rates and brackets listed in Table 1 apply from 2020

for married taxpayers filing joint income tax returns. The seven

The income tax brackets listed in Table 1 do not reflect the increases

to the tax brackets that will come into force in 2021 based on

annual inflation adjustments. For example, married taxpayers who

Submit joint income tax returns and have taxable income in 2021

Over $ 628,300 will be taxed at the highest tax rate of 37%. That is a

$ 6,250 increase from the $ 622,050 shown in the table

1.

2.

Earned income up to 2021 based on an annual inflation adjustment

$ 142,800 is subject to Social Security tax.

The content of this article is intended to provide a general overview

Guide to the subject. Expert advice should be obtained

about your particular circumstances.

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