Biden’s Brewing Budget
As this current tax season continues on, there has been a lot of talk going on in D.C. concerning future tax rates. President Biden is calling for a top marginal income tax rate of 39.6% which is an increase from the previous 37%. This increase to 39.6% is for those single filers making more than $400,000 and married couples with an income over $450,000. Wanting to “reward work, not wealth,” President Biden’s proposal sought to help cover his top priorities of the 2024 budget such as Medicare and Social Security. Furthermore, it would also expand and create several tax credits, including a 3-year extension of the American Rescue Plan Act Child Tax Credit (CTC). These tax credits would offset the $4.7 trillion gross taxes by about $900 billion. Tax Foundation.
On top of this, he is pushing for a 25% minimum for Americans whose wealth exceeds $100 million. This would “ensure that no billionaire pays a lower tax rate than a teacher or firefighter.” Previously, in 2021, a similar tax was pushed by Democrats but did not have broad enough support, which is what is projected for Biden’s current proposal.
Keep on Keepin on
Due to a yearly inflation adjustment from the IRS, the top marginal income tax rate is 37%, up 7% from 2022, which starts at $578,126 for single filers and $693,751 for married couples. CNBC. Without any changes by Congress, several provisions from the Tax Cuts and Jobs Act will bump the top income tax rate back to 39.6%. This will happen regardless of Biden’s plans most likely if negotiations do not begin before the end of 2025. According to the Institute on Taxation and Economic Policy, 2/3 of the top 1% would see a tax increase as a result of the increase.
For more information, please reach out to the Professionals at The Center for Financial, Legal, & Tax Planning Inc., at 618-997-3436.