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Key Takeaways & Insights

A high-level overview of the proposed tax policies of the presidential candidates that could affect individual taxpayers.

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  • The proposed tax policies of the presidential candidates may create planning opportunities and considerations.
  • No one knows if or when any of the proposed changes might be enacted into law after the election.
  • Taxpayers should work with their tax professional to assess the possible impact on their unique financial situations.

Taxes are a critical part of most financial decisions. They’re also a hot topic for elections, and this year is no exception. Below is a high-level comparison of the proposed tax policies of President Trump and former Vice President Joe Biden that could affect individual taxpayers. We encourage you to review the full policies of all the candidates.

Note: The Tax Cuts and Jobs Act (TCJA) of 2017 included many of President Trump’s tax initiatives—some of which are set to expire in 2025. If re-elected, his primary tax objective will likely be to make these provisions permanent. As such, President Trump hasn’t introduced many new proposals as part of his re-election campaign. But he has offered ideas on several tax topics, which we’ve incorporated into the chart. More information about his policies may be released at a later date.

Additionally, the information in this chart is current as of of the date it was written and and is subject to change without notice. There are no guarantees that any of the proposals will be enacted into law regardless of the election outcome.

President Trump
Current Tax Law
Former Vice President
Joe Biden
Individual Tax Rates
Enact 10% middle-class tax cut, potentially lowering the 22% marginal rate to 15% for individuals with income over $40,125 ($80,250 married filing jointly)37% top marginal rate for individuals with income over $518,400 ($622,050 married filing jointly)Raise top marginal rate back to 39.6% for income over $400,000
Capital Gains Tax Rates
Index capital gains for inflation and reduce top capital gains tax rate to 15%20% top tax rate for individuals with income over $441,450 ($496,600 married filing jointly)Tax capital gains and qualified dividends at 39.6% for taxpayers earning more than $1 million
Estate and Gift Taxes
Extend higher lifetime exemption amountLifetime exemption of $11.58 million per person (drops to $5.79 million in 2026)

Step-up in basis of appreciated property transferred at death

Lower lifetime exemption to approximately $3.5 – $5 million per person

Eliminate step-up in basis on appreciated property transfers at death

Possibly increase estate tax rate and capital gains tax payable upon death

Tax Deductions
Extend higher standard deduction and other deductions created by the Tax Cuts and Jobs Act of 2017Standard deduction of $12,400 for individuals ($24,800 for married filing jointly)

Various itemized deductions available, subject to certain rules and limitations

Limit itemized deductions to 28% of adjusted gross income
Social Security Payroll Taxes
Forgive 100% of Social Security payroll taxes deferred from September 1, 2020 to December 31, 2020Current 12.4% tax is split between employers and employees

Wages above $137,700 not subject to Social Security payroll taxes

Subject wages below $137,700 and above $400,000 to Social Security payroll taxes
Education
Enact a tax credit program that would provide up to $5 billion in tax credits annually for individual and corporate donations to certain not-for-profit scholarship-granting organizationsNo tax credit for contributions to certain not-for-profit scholarship-granting organizations (might be tax deductible as a charitable contribution)

Forgiven student loan debt included in taxable income

Exclude forgiven student loan debt from taxable income
Child Tax Credits
Extend the $2,000 child tax credit set to expire after 2025Child tax credit worth up to $2,000 ($500 for other dependents)

Maximum $1,200 child and dependent care credit

Raise the child tax credit to $8,000 per child, up to two children, for taxpayers with income up to $125,000 (Full phase-out of credit for income over $400,000)

Expand child and dependent care credit to include a $5,000 tax credit for family caregivers tending to people with physical/cognitive disabilities

 

Planning for Year-End and 2021

Our tax planning specialists have extensive knowledge of federal and state tax laws. They can help you identify the steps you can take before December 31 to mitigate your 2020 tax liabilities. They can also help you evaluate your current tax strategy to create a plan that can be “switched on” if any of the above proposals come to fruition. Contact a Cerity Partners advisor to learn more.


Meet the Author

Kathryn Jodon

Principal

Kathryn is a Principal in the Cleveland office. She has over eight years of experience serving clients with tax and accounting advice and services.

Prior to joining Cerity Partners, Kathryn was a Senior Associate in the tax group at RSM US LLP. In this role, she provided tax compliance, planning, and consulting services to manufacturing, real estate, and high net worth clients. Before RSM, Kathryn worked as an assistant controller in the compressed air industry maintaining all financial records for a privately owned manufacturer.

Kathryn earned an MS in Accountancy from the Fisher College of Business at The Ohio State University. She earned a BS degree in Accounting from Penn State University. Kathryn is a Certified Public Accountant and a member of both the American Institute of Certified Public Accountants and the Ohio Society of CPAs.

Connect with Kathryn

Erica Cameron

Partner

Erica is a Partner in the Cleveland office. She advises individuals, families, businesses, and nonprofits providing comprehensive wealth management services.

Prior to joining Cerity Partners, Erica was a Vice President, Portfolio Manager and Director of Operations at Spero-Smith Investment Advisers, which she joined in 2004.

Erica earned a Bachelor of Business Administration degree from Ohio University with a concentration in Finance and Management Information Systems (MIS), and a Masters of Business Administration in Finance from John Carroll University in Cleveland, Ohio. She is a CFP® professional and a member of the Financial Planning Association (FPA).

Within the Cleveland-area community, Erica is a member of Women for Economic & Leadership Development (WELD) and serves on its leadership team as the chair of the impact committee. She serves on the Associate Board of the Greater Cleveland Sports Commission and the Alumni Committee of the Cleveland Leadership Center. She is a graduate of the 2013 class of Bridge Builders program of the Cleveland Leadership Center.

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