2020 Presidential Candidate Tax Policies

As we near election day, tax and economic policy has taken center stage. Below is a summary of each candidate’s position on various tax issues which directly impact small businesses and their owners.

While the likelihood of either candidate’s plan being passed in its entirety is small, it’s important to consider the potential tax environment as we approach planning season. If you have any questions or concerns, please reach out to your contact at Nohre & Co.

Business Tax

Biden

Trump

Corporate Tax Rate • Increase corporate rate from 21% to 28%

• Impose a 15% minimum tax on book income for C corporations with over $100 million in book income

• Strengthen rules relating to independent contractors and increase related penalties

• Lower corporate rate from 21% to 20%
Real Estate • Increase depreciable lives of rental real estate assets

• Eliminate 1031 like-kind exchanges for real estate

• Establish additional incentives for opportunity zone funds to partner with community organizations, while adding oversight to the funds

• Eliminate certain tax breaks for real estate investors with income over $400,000

• Extend 100% bonus depreciation past 2023
Manufacturing • Establish a tax manufacturing communities credit aimed at communities that experience mass workforce layoffs

• Establish tax credits to encourage domestic production of “designated critical products”

• Enact a 10.5% tax rate for international companies that bring back work to U.S. supply chains for medical and other necessary supplies
Credits Establish a workplace childcare facility tax credit of up to 50% of employer’s first $1 million in costs for on-site childcare

• Expand tax deductions for energy technology upgrades in commercial buildings

• Offer tax credits to small businesses to offset workplace retirement plan costs

• Establish refundable tax credit to reimburse businesses for extra costs of providing full health benefits to employees during periods of reduced working hours

Individual Tax

Biden

Trump

 Individual Tax Rate

• Raise the top marginal rate to 39.6%

• Increase the social security earnings cap

• Enact a 10% middle-class tax cut, which could lower the 22% marginal rate to 15%

Capital Gains

• Tax capital gains at ordinary rates for taxpayers with income over $1 million • Reduce capital gains rates

• Enact a capital gains tax holiday

Credits

• Raise the dependent care credit to $8,000 for one child and $16,000 for two or more children for taxpayers under income of $125,000 (phased out at $400,000)

• Extend eligibility for premium tax credits to taxpayers with income above 400% of the federal poverty level

• Reinstate tax credit for residential energy efficiency

• Extend the child tax credit created by the Tax Cuts and Jobs Act past 2025

Deductions

• Cap itemized deductions at 28% of value for taxpayers with income over $400,000

• Phase out the QBI deduction for taxpayers with income over $400,000

• Extend the higher standard deductions created by the Tax Cuts and Jobs Act past 2025

Estate Tax

• Assess capital gains tax on assets held by taxpayers at death (eliminate basis step-up)

• Restore the 2009 estate tax levels

• Extend the higher estate and gift tax exemption amount created by the Tax Cuts and Jobs Act past 2025

Note: this summary is not intended to be a comprehensive list of all proposed tax policies under each candidate, nor an endorsement of either candidate’s policies, but rather a summary of proposals we think may be of interest to our clients. This summary was prepared as of August 26, 2020, and may not fully represent changes made to either candidate’s campaign leading up to the election.

Sources:

  1. https://www.taxpolicycenter.org/
  2. https://www.accountingtoday.com/list/election-2020-trump-vs-biden-on-corporate-tax-policy

About Zachary Nohre

Zach is a CPA and business advisor who creates proactive tax strategies to help entrepreneurs manage their tax exposure and feel empowered by their financial decisions.


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