Where President Biden Stands on Tax Policy

How would President Biden change the tax code?


Campaign Proposals Current Proposals*
Individual income tax rates and brackets
Restore the top individual income tax rate to 39.6 percent Similar (AFP)
Repeal the tax cuts from the Tax Cuts and Jobs Act for people with income above $400,000 No proposal
Capital gains, dividends, and interest income

Tax capital gains at the same rate as ordinary income for taxpayers with over $1 million in income

Tax capital gains at the same rate as ordinary income (39.6 percent or 43.4 percent including the net investment income tax) for taxpayers with over $1 million in adjusted gross income, effective April 28, 2021 (AFP)

Tax capital gains on assets still held by taxpayers when they die

Tax capital gains in excess of $1 million (plus $250,000 for capital gains on personal residence) on assets still held at death; gains from family-owned businesses and farms would be exempted if heirs run the business (AFP)

Eliminate certain tax preferences for real estate investors with over $400,000 of income

Repeal of deferral of capital gains tax on like-kind exchanges for gains greater than $500,000 (AFP)

None

Repeal the preferential tax treatment of carried interest. Income from an investment partnership would be taxed as ordinary income and subject to self-employment taxes (AFP)

Exemptions, deductions, and credits

Extend the Earned Income Tax Credit to workers age 65 and older without qualifying children

Similar and also increase credit for workers without qualifying children and  lower age requirements to 19 (24 for students attending school at least half-time and 18 for former foster children and homeless youth)                 (One-year expansion of credit enacted in ARP; AFP would make expansion permanent) 

Expand the Child and Dependent Care Tax Credit to cover up to 50 percent of qualifying expenses of up to $8,000 for one child and $16,000 for two or more children, extend eligibility for the maximum credit to taxpayers with income under $125,000, phase down the credit as income rises above $125,000, and make the credit refundable

Similar and also phase the credit down to zero once income reaches $438,000 and strengthen administration   (One-year expansion enacted in ARP; AFP would make expansion permanent) 

Create a $5,000 tax credit for informal caregivers of people who have certain physical and cognitive needs

No proposal

Temporarily expand the Child Tax Credit to increase the maximum amount to $3,600 for each child under the age of 6 and $3,000 for each child ages 5 through 17, make the credit fully refundable, allow people to receive a portion of the credit each month

Similar: one-year expansion enacted in ARP; AFP would extend increased credit amounts through 2025 and make the credit fully refundable permanently 

Expand Economic Impact Payments to extend coverage to dependents over age 16, provide additional payments as needed during the pandemic, and simplify the application process

ARP authorized one round of payments of $1,400 per person, available to all dependents regardless of age; no further rounds proposed

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

No proposal

Increase tax benefits for older Americans who purchase long-term care insurance using their retirement savings

No proposal

Increase tax preferences for middle-income taxpayers’ contributions to 401(k) plans and individual retirement accounts

No proposal

Allow caregivers to make tax-preferred contributions to retirement plans to make up for periods they are not in the formal labor market

No proposal

Provide automatic access to a 401(k) for most workers who do not have a pension or 401(k)-type plan

No proposal

Expand eligibility for hardship withdrawals from retirement savings to include survivors of domestic abuse and sexual assault; allow survivors to take distributions from retirement savings without tax penalties

No proposal

Restore the full electric vehicle tax credit, target it to middle-income consumers, and prioritize the purchase of American-made vehicles as much as possible

No proposal

Reinstate tax credits for residential energy efficiency

Increase and extend the Residential Energy Efficiency property tax credit, beginning to phase-out in 2027 and reaching zero in 2031 (AJP)

Create a refundable tax credit of up to $15,000 for down payments available to first-time home buyers and payable when taxpayers purchase their home

No proposal

Create a refundable renter’s tax credit that would be equal to the difference between 30 percent of recipients’ income and the lower of their rent or the Small Area Fair Market Rent; the total amount of credits across all recipients would be capped at $5 billion a year

No proposal

Expand income-based repayment for undergraduate federal student loans; exempt forgiven student loans from taxable income

No proposal

None Provide federally subsidized state and local bonds for school and transportation infrastructure (AJP)
Payroll tax
Increase the Social Security earnings cap No proposal

None

Apply the 3.8 percent Medicare tax consistently to all taxpayers earning over $400,000 (AFP)

Temporarily waive experience rating used for the computation of Unemployment Insurance taxes when companies use Short-Time Compensation—federal subsidies for businesses that reduce their workers’ hours rather than laying off some employees.

No proposal
Health

Extend eligibility for premium tax credits to taxpayers with income above 400 percent of the federal poverty level; lower the limit on the cost of coverage from 9.86 percent of income to 8.5 percent

Similar provisions in ARP would be made permanent; would also repeal indexation of applicable contribution percentages after 2022 (AFP)

Calculate premium tax credits based on the cost of a gold plan rather than a silver plan

No proposal

Allow businesses to deduct the cost of emergency paid sick leave against expected tax payments, or seek reimbursement for paid sick leave, during the coronavirus outbreak.

Allow employers with up to 500 employees, certain governmental employers, and self-employed individuals to claim a refundable tax credit against the employer's share of Medicare tax payments for the cost of providing COVID-related paid sick and family leave between April 1, 2021 and September 30, 2021 (ARP); no proposal yet for period beyond September 30

Institute a refundable tax credit to reimburse businesses and nonprofits for the extra costs of providing employees with full health benefits during periods of a reduction in work hours

Similar provision included in ARP, expiring September 30, 2021; no proposal yet for period beyond September 30

Business taxes

Increase the top corporate income tax rate to 28 percent

Similar (AJP)

Impose a 15 percent minimum tax on companies’ book income with credit for taxes paid to other countries; allow companies to carry over losses from nonprofitable years

Impose a 15 percent minimum tax on book profits for companies with income of at least $2 billion. Allow foreign tax credits and major US business tax credits, and allow companies to carry over losses (AJP)

Impose a 10 percent surtax on income from the sales of goods produced abroad by a US company and sold in the United States

No proposal

Replace the current Global Intangible Low-Tax Income (GILTI) tax with a country-by-country minimum tax on the earnings of foreign subsidiaries of US multinationals at a rate of 21 percent; eliminate the 10 percent of qualified business asset investment exclusion 

Similar, and disallow deductions attributable to exempt income (AJP)

None Modify foreign oil and gas extraction income and foreign oil-related income rules; also modify tax rule for dual-capacity taxpayers (AJP)

None

Repeal the base erosion and anti-abuse tax (BEAT) and deny deductions to foreign corporations on payments that would allow them to shift profits out of the United States if they are based in a country without a foreign minimum tax (AJP)

None Limit foreign tax credits for sales of hybrid entities (AJP)
None Restrict deductions of excessive interest of members of financial reporting groups for disproportionate borrowing in the United States (AJP)

Deny deductions and expensing of costs incurred from moving certain jobs or production outside the United States

Similar, and provide a tax credit to support onshoring jobs in the United States (AJP)

Tighten anti-inversion rules, making it more difficult for US multinational corporations to avoid US taxes through certain types of mergers with foreign corporations

Similar (AJP)

None

Repeal deduction allowed for Foreign Derived Intangible Income (FDII) (AJP)

None Permanently extend the current limitation that restricts the use of large, excess business losses (AFP)

Create a Made in America tax credit, payable in advance, for up to 10 percent of qualifying investments in manufacturing and certain services in the United States; the credit could also apply to incremental increases in payroll for US jobs in manufacturing

No proposal

Expand the new markets tax credit to permanently provide $5 billion in support each year

Similar (AJP)

Establish a new manufacturing communities tax credit and target it toward communities that experience mass layoffs or the closure of a major government institution; fund the credit for five years

No proposal

Establish incentives for investors to partner with nonprofits and community organizations to create jobs and improve households’ financial circumstances in opportunity zones

No proposal

Create new incentives, including tax credits, to encourage domestic production of designated critical products, such as semiconductors

Similar (AJP)

Expand tax deductions for energy technology upgrades, smart metering systems, and other emissions-reducing investments in commercial buildings. Similar (AJP)

Impose a carbon adjustment fee against countries that do not meet certain climate and environment standards

No proposal

Develop a low-carbon manufacturing sector by providing tax credits for businesses to upgrade their equipment and processes, investing in factory construction and expansion, and deploying low-carbon technologies

Restore and expand the Advanced Manufacturing Tax Credit (48C) offering $10 billion of investment tax credits for qualifying manufacturing activities (AJP)

Eliminate tax preferences for fossil fuels

Similar (AJP)

Enhance tax incentives for carbon capture, use, and storage

Similar (AJP)

Extend Investment Tax Credit for clean energy generation and storage.

Extend and expand the Renewable Energy Investment Tax Credit and extend the Renewable Energy Production Tax Credit, phasing out both measures beginning in 2027 and reaching zero by 2031 (AJP)

None Extend and expand production tax credits for energy-efficient homes (Section 45L) and commercial buildings (Section 179D).
None Create new investment tax credits for electricity transmission and insulation.
None Create new production tax credits for low-carbon aviation fuel, hydrogen, and nuclear energy from existing facilities. 
None Provide a new nonrefundable credit of up to $5,000 for qualified disaster mitigation expenditures by homeowners and businesses (AJP)

Create a tax credit to cover 50 percent of up to $1 million of a business's costs of constructing a child care center at a workplace for their employees

Similar; increase existing credit (AFP)

Offer tax credits to small businesses to offset the costs of workplace retirement plans

No proposal

Tighten the rules for classifying independent contractors; increase penalties for misclassification

No proposal

End pharmaceutical companies’ tax deduction for advertisement spending

No proposal

Impose a tax penalty when pharmaceutical companies increase the costs of their brand-name, biotech, and generic drugs by more than the inflation rate

No proposal

Expand the low-income housing tax credit by $10 billion over 10 years

Expand the low-income housing tax credit for projects in difficult development areas or low-poverty areas (AJP)

Establish a tax credit to help finance the costs of rehabilitating properties in distressed neighborhoods

Establish Neighborhood Homes Investment Tax Credit for costs of building and rehabilitating homes in distressed neighborhoods (AJP)

Restore the full electric vehicle tax credit, target it to middle-income consumers, and prioritize the purchase of American-made vehicles as much as possible

Provide business tax credit for new medium- and heavy-duty zero-emission vehicles (AJP)

None Extend and enhance tax credit for electric vehicle charging stations through December 31, 2026 (AJP)
Estate and wealth taxes

Restore the 2009 estate tax levels

No proposal

Excise and consumption taxes

None

Reinstate Superfund excise taxes at double previous rates from 2022 through 2031 and extend to other crude products (AJP)

Other

Establish a financial risk fee on certain liabilities held by financial institutions with more than $50 billion in assets

No proposal

Take action to increase tax compliance among high-income taxpayers

Increase IRS funding by $80 billion over ten years for auditing high-income taxpayers, large businesses, and estates; providing additional resources for enhancing its information technology; and strengthening customer service (AFP)

None

Require banks and other institutions to report deposits and withdrawals on all accounts with a gross flow of at least $600 (AFP)

None

Give the IRS authority to regulate and establish minimum competency standards for paid preparers and penalize those who do not sign tax returns (AFP)

None Improve information reporting for payments subject to backup withholding (AFP)
None Extend statute of limitation for listed transactions, and impose liability on shareholders to collect unpaid income taxes of applicable corporations (AFP)
None Modify tax administration rules (AFP)

*ARP is the American Rescue Plan Act, enacted March 11, 2021

AJP is the American Jobs Plan, announced on March 31, 2021

AFP is the American Families Plan, announced on April 28, 2021

Source: "An Updated Analysis of Former Vice President Biden's Tax Proposals." Tax Policy Center, November 6, 2020. 

H.R. 1319, "The American Rescue Plan Act of 2021." 117th Cong. (2021).

"Fact Sheet: The American Jobs Plan." White House Briefing Room, March 31, 2021.

"Fact Sheet: The American Families Plan." White House Briefing Room, April 28, 2021.

"Budget of the U.S. Government: Fiscal Year 2022." White House Office of Management and Budget, May 28, 2021.

"General Explanations of the Administration's Fiscal Year 2022 Revenue Proposals." Treasury Department, May 28, 2021.

 

 

 

This page is funded by the Peter G. Peterson Foundation. 

Last updatedSeptember 22, 2021