See How Your Taxes May Change – Forbes Advisor

Editorial Note: Forbes Advisor may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations.

President Joe Biden campaigned on a promise to raise taxes on wealthy Americans and corporations. His core tax proposals would increase taxes on people earning more than $400,000 per year and raise corporations’ tax rates from 21% to up to 28%.

Although his tax plan will primarily impact the bottom line of the wealthiest of Americans, low- and middle-income households may benefit from increased tax credits.

To understand how these policy changes and proposals could impact you, use our calculator to determine how much you might pay under Biden’s tax plans.

Estimated gross annual income

What is your filing status?

More options

About your family

Add dependents and their ages

Child and dependent care expenses

Add dependents and their ages

Child and dependent care expenses

Add dependents and their ages

Child and dependent care expenses

Tax contributions & deductions

Under Biden’s proposed tax plan you’ll pay $5,600 more than the current federal tax plan under Trump

See more

Comparing both tax results

Est. Federal Taxes

Est. Federal Refund

  • Your marginal federal income tax rate remained at X%
  • Your effective tax rate is now x% (previously y%)

Biden Background ImageEmail Capture

Disclaimer: This tool is for educational purposes only and should not be used for tax preparation purposes. Your actual tax payment or refund may vary depending on several factors. This tax calculation omits certain deductions and credits for simplicity. We suggest seeking a tax professional’s advice to determine how any tax code changes would impact your financial situation.

Frequently Asked Questions (FAQs) About Biden’s Tax Plan

Will These Changes Impact the 2021 Tax Season?

The changes will not impact 2020 tax returns, which most Americans will file in spring 2021. At this point, most of Biden’s tax plans are proposals, and haven’t been put to a vote in Congress.

However, Biden signed the American Rescue Plan Act in March, which expands the child tax credit, child and dependent care credit and earned income tax credit temporarily for the 2021 tax year only.

Will The Federal Tax Brackets Change?

Yes, but only for the wealthiest Americans. Individuals earning more than $400,000 per year would see a significant change under Biden’s tax plan. The top-tier tax bracket rate would revert from the current top rate of 37% to the pre-Tax Cuts and Jobs Act top rate of 39.6%.

If you earn more than $1 million annually you would see an increase in the long-term capital gains tax rate, which is a special tax assessed on assets held longer than a year and qualified dividends.

Under the current tax law, capital gains are taxed at 0%, 15%, or 20% depending on your taxable income and filing status. An additional 3.8%, the net investment income tax, would be assessed on high-income individuals whose modified adjusted gross income is above $200,000 for the year 2020 ($250,000 for married filing joint taxpayers). Biden’s tax plan proposes increasing the top-tier capital gain tax rate to 39.6% for those earning $1 million or more. This means that those who earn more than that could be taxed as high as 43.4%, which includes the additional 3.8% tax.

What Will Happen To Tax Credits?

Biden doesn’t plan to raise taxes on low- to middle-income taxpayers. However, this group can expect to see changes to some tax credits for 2021, which means they may end up with more money back in their pockets. These include the child tax credit, child and dependent care credit, and earned income tax credit.

Biden also plans to reinstate the home buyer tax credit, implement a tax credit for those saving to a 401(k) retirement plan, and create a renter’s tax credit.

What Are The Expanded Child Tax Credit Changes?

Biden’s American Rescue Plan increased the child tax credit for the 2021 tax year only.  The credit for qualifying children increased from up to $2,000 to up to $3,600 for children under the age of 6 and up to $3,000 for children ages 6 to 17. The credit is now fully refundable.

Previously, the credit was only partially refundable, and provided a maximum of $2,000 per qualifying child under 17.

What Are the Child and Dependent Care Credit Changes?

For 2021, Biden’s tax plan increased the child and dependent care credit qualifying expenses, from up to $3,000 per child to up to $8,000 per child (maximum $16,000 for two or more dependents).

Previously, taxpayers could deduct $3,000 ($6,000 for two or more dependents) of the costs paid for dependent care on their federal income tax return.

The dependent must be under age 13, a spouse or another qualifying individual who cannot care for themselves. The allowable tax credit will depend on the taxpayer’s income. This change is applicable only to the 2021 tax year.

Calculator Methodology

This calculator compares Biden’s key tax proposals with 2020 tax law to show expected tax changes. It does not compare other income, deductions, or credits that are expected to remain unchanged even if all of Biden’s tax plans are passed. Its inputs are based on information from the 2017 Tax Cuts and Job Acts, the 2020 tax brackets, and Biden’s core tax policies as follows:

Biden’s key tax policies and proposals

  • Increase tax rate from 37% to 39.6% for households earning $400,000 or more;
  • Increase child tax credit from $2,000 to $3,000 ($3,600 for those under the age 6);
  • Increase child and dependent care credit from $3,000 to $8,000 per dependent (from $6,000 to $16,000 for multiple dependents); and
  • Cap itemized deductions to 28% for households earning more than $400,000.

Limitations of this calculator

  1. The estimated taxes or projected refunds do not consider the earned income tax credit (EITC), additional Medicare taxes assessed on high-income earners, capital gain taxes, or self-employment taxes that may impact your tax situation.
  2. The child and dependent care credit do not consider dependents and spouses who are physically or mentally incapable of self-care over 13 years of age.
  3. We modified the 2020 tax brackets to reflect Biden’s tax proposals. For single and head of household taxpayers, we adjusted the 35% tax bracket to reflect upper-income limits of $400,000. For married couples filing jointly, we adjusted the 32% and 35% tax brackets to reflect the upper-income limits of $400,000. For all taxpayers, we replaced the 37% with Biden’s proposed tax increase of 39.6% for incomes over $400,000.