You are now subscribed
Your newsletter sign-up was successful
Want to add more newsletters?
Delivered daily
Kiplinger Today
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more delivered daily. Smart money moves start here.
Sent five days a week
Kiplinger A Step Ahead
Get practical help to make better financial decisions in your everyday life, from spending to savings on top deals.
Delivered daily
Kiplinger Closing Bell
Get today's biggest financial and investing headlines delivered to your inbox every day the U.S. stock market is open.
Sent twice a week
Kiplinger Adviser Intel
Financial pros across the country share best practices and fresh tactics to preserve and grow your wealth.
Delivered weekly
Kiplinger Tax Tips
Trim your federal and state tax bills with practical tax-planning and tax-cutting strategies.
Sent twice a week
Kiplinger Retirement Tips
Your twice-a-week guide to planning and enjoying a financially secure and richly rewarding retirement
Sent bimonthly.
Kiplinger Adviser Angle
Insights for advisers, wealth managers and other financial professionals.
Sent twice a week
Kiplinger Investing Weekly
Your twice-a-week roundup of promising stocks, funds, companies and industries you should consider, ones you should avoid, and why.
Sent weekly for six weeks
Kiplinger Invest for Retirement
Your step-by-step six-part series on how to invest for retirement, from devising a successful strategy to exactly which investments to choose.
Joe Biden says his tax plan would increase taxes on the wealthy and offer breaks for the middle class, but at least one of his proposals could boost taxes farther down the income ladder.
A key component of Biden’s plan is that tax hikes will be limited to people who make more than $400,000. He wants to raise the highest individual income tax rate to 39.6% from 37%, restoring the top rate that was in place before the 2017 Tax Cuts and Jobs Act. (In 2020, the 37% top rate kicks in for single taxpayers with taxable income of more than $518,400, or for married couples with taxable income of more than $622,050.) Biden also wants to cap itemized deductions for the wealthiest Americans at 28% and end favorable capital gains rates for anyone with income of more than $1 million. Those taxpayers would pay their ordinary income rate of 39.7% on capital gains and dividends. Currently, investments and other assets held for more than a year are taxed at a rate of 0% to 23.8%, depending on income.
A plan to change the way inherited assets are taxed could have a broader impact. Now, when someone inherits stock, mutual funds or other assets, the cost basis of those assets is stepped up to their value on the date of the original owner’s death. For example, if the original owner purchased shares of stock for $10 and its value was $50 a share when he died, his heirs would only owe taxes on any increase in value over $50 when they sell the shares. Critics of the “step up” say it discourages individuals from selling investments that have increased in value because they can leave them to their heirs, tax-free. But in addition to eliminating a valuable tax break for heirs, eliminating the step-up could create compliance headaches, because heirs would have to track down the original cost of assets that may have been owned for many years.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Biden has also proposed a suite of tax breaks for low- and middle-income families, including:
- An $8,000 tax credit to help offset the costs of child care.
- A tax exclusion for student loans that have been forgiven. Currently, if a borrower’s loans are forgiven, the amount is treated as taxable income (there are exceptions for borrowers who are eligible for certain public service loan programs).
- A refundable tax credit for low- and middle-income workers who contribute to IRAs and employer-provided retirement savings plans. Biden says the current system, which allows all workers to deduct their contributions, primarily benefits wealthier workers.
- Catch-up contributions to retirement plans for caregivers of any age who leave the workforce for at least a year. Currently, catch-up contributions are limited to workers age 50 or older. Biden also proposes a $5,000 tax credit for family caregivers.
Trump’s tax plan. The Trump administration’s plan to release a package of tax proposals was put on hold as other developments—the coronavirus pandemic in particular—have taken center stage. But based on Trump’s public statements, one of his top tax priorities in his second term would be to make provisions in the Tax Cuts and Jobs Act permanent. Unless Congress acts, most of the individual tax cuts included in the act will expire in 2025.
Trump has also expressed an interest in providing more tax relief for middle-class workers. Earlier this year, National Economic Council Director Larry Kudlow said Trump was considering a “Tax Cuts 2.0” that would provide a second round of tax cuts focused on the middle class.
In the short term, though, most of Trump’s tax proposals are focused on stimulating the economy, which has been devastated by the pandemic. He has proposed stimulating the economy by cutting payroll taxes, which would increase the size of workers’ paychecks. He has also suggested he would support a $4,000 tax credit for Americans who travel domestically. The travel industry, which has been hard hit by the pandemic, says such a credit would encourage people to take vacations, but it’s unlikely to gain much support in Congress.
Sandra Block, Lisa Gerstner, Nellie S. Huang and Anne Smith contributed to this story.
-
Dow Adds 1,206 Points to Top 50,000: Stock Market TodayThe S&P 500 and Nasdaq also had strong finishes to a volatile week, with beaten-down tech stocks outperforming.
-
Ask the Tax Editor: Federal Income Tax DeductionsAsk the Editor In this week's Ask the Editor Q&A, Joy Taylor answers questions on federal income tax deductions
-
States With No-Fault Car Insurance Laws (and How No-Fault Car Insurance Works)A breakdown of the confusing rules around no-fault car insurance in every state where it exists.
-
Can I Deduct My Pet On My Taxes?Tax Deductions Your cat isn't a dependent, but your guard dog might be a business expense. Here are the IRS rules for pet-related tax deductions in 2026.
-
Tax Season 2026 Is Here: 8 Big Changes to Know Before You FileTax Season Due to several major tax rule changes, your 2025 return might feel unfamiliar even if your income looks the same.
-
2026 State Tax Changes to Know Now: Is Your Tax Rate Lower?Tax Changes As a new year begins, taxpayers across the country are navigating a new round of state tax changes.
-
3 Major Changes to the Charitable Deduction for 2026Tax Breaks About 144 million Americans might qualify for the 2026 universal charity deduction, while high earners face new IRS limits. Here's what to know.
-
Retirees in These 7 States Could Pay Less Property Taxes Next YearState Taxes Retirement property tax bills could be up to 65% cheaper for some older adults in 2026. Do you qualify?
-
Estate Tax Quiz: Can You Pass the Test on the 40% Federal Rate?Quiz How well do you know the new 2026 IRS rules for wealth transfer and the specific tax brackets that affect your heirs? Let's find out!
-
5 Types of Gifts the IRS Won’t Tax: Even If They’re BigGift Tax Several categories of gifts don’t count toward annual gift tax limits. Here's what you need to know.
-
The 'Scrooge' Strategy: How to Turn Your Old Junk Into a Tax DeductionTax Deductions We break down the IRS rules for non-cash charitable contributions. Plus, here's a handy checklist before you donate to charity this year.
