With the vote for U.S. President certified in Georgia, and with the release of funds allowing President-elect Biden to properly transition the federal government, there is little question that Joe Biden will become the 46th President on January 20, 2021. And with the promise of a new administration comes the promise of many national policy changes.
One of the main policy changes that were front-and-center during the campaign was tax policy. The significant tax overhaul that occurred with the Tax Cuts and Jobs Act (TCJA) in 2017 resulted in, among other things, a lower tax burden for many businesses (both corporations or pass-through entities) and a lower tax burden on certain individuals, trusts, and estates. Interestingly, the tax provisions for individuals in the TCJA were scheduled to expire in 2025, while the lower taxes on corporations and businesses were generally made permanent.
President-elect Biden, during his campaign, focused on the fact that the TCJA’s benefits were skewed towards large corporations and wealthy individuals. He, therefore, proposed tax policy changes in an effort to readjust the tax burden more fairly. His goal was to increase overall revenue into the nation’s coffers while providing tax relief for lower- and middle-income taxpayers.
In this article, we will discuss some of the tax changes that might be on the horizon with the new Biden administration – particularly with regard to corporations and businesses. These changes are only possibilities, and might not come to fruition, because it is still unclear whether President-elect Biden will be able to get his suggested tax changes through Congress. If, after reading this article, you would like to discuss your own tax situation for your business, we invite you to call the Florida tax planning attorney for businesses, Mary E. King, P.L.
The Law Office of Mary E. King, P.L. can make sure that your tax issues are resolved efficiently and at the lowest cost to you. Please fill out our online contact form, or call us at 941-906-7585 today.
Big Picture of President-elect Biden’s Tax Plan
As noted, President-elect Biden campaigned on the promise that all taxpayers, including corporations and the wealthy, pay “their fair share.” Thus, the headline of Biden’s overall tax proposal was that he seeks to have higher taxes on corporations and the wealthy, and no increase of taxes for those taxpayers who have income below $400,000.
Generally speaking, he plans to achieve that headline policy by raising the top individual federal tax rate from the current 37% to the rate in place prior to 2016, 39.6%. Individuals earning more than $400,000 would pay additional payroll taxes. Also, Biden’s plan has a panoply of personal tax benefits for low- and middle-income households, like raising the maximum Child and Dependent Tax Credit from $3,000 to $8,000.
Tax Proposals Impacting Businesses
First and foremost, Biden’s tax plan seeks to raise the corporate tax rate from the current 21% to 28%. However, as was debated during the campaign, many large, profitable corporations paid zero taxes in 2018 and 2019. Thus, to stop companies from making record profits but paying no taxes, Biden’s plan proposes that all corporations would be subject to a 15% alternative minimum tax on book income. Further, all foreign income earned by operations of U.S. companies abroad would be taxed at 21%, which is double the current rate.
In addition, the Biden tax plan also seeks to shape the tax code to:
- Create a disincentive for companies to export jobs overseas,
- Create an incentive for companies to invest in infrastructure, and
- Encourage companies to invest in green energy, transportation, and manufacturing.
Biden’s plan would achieve those goals with a mix of penalties for exporting jobs, and tax credits to companies that invest in the U.S.
What Can You Do to Protect Your Business?
The best way to prepare for any possible tax law changes that might occur in 2021 is to consult with an experienced tax attorney who will understand the tax changes that may be coming and will have practical strategies on how to minimize your business’ tax liability.
You may want to grow your business next year, you may want to gift your business to your children, or you may want to start a new business. All of those things require some tax planning, and with an incoming administration, a lot of your current tax strategies may need to change so you can protect your business.
Talk to a Florida Tax Planning Attorney for Businesses Today and Get the Help You Need
Having a Florida tax planning attorney at your side to advise you on options and strategies for responding to the IRS is worth its weight in gold.
Consider reaching out to the Law Offices of Mary E. King to help. Tax matters can be complicated, and thus, it is always helpful to have someone in your corner who understands the tax law and deals with the IRS on a regular basis. Indeed, beyond just the stimulus payment from the IRS, there could be other issues with which a seasoned tax attorney can help.
So, when it comes to dealing with tax relief and tax litigation, you need to talk to a Florida tax planning attorney who can help. Mary E. King has spent her career concentrating in tax law and can help you with tax scams in Florida and elsewhere. Attorney King has a wealth of information about what types of options would make the most sense for you and your business.
That helps explain why she’s received an A+ rating from the Florida Better Business Bureau. If you have a tax-related issue – no matter how small or how large – setting up an initial consultation with Mary E. King, tax lawyer of Florida, is the first step you should take towards relief.
The Law Office of Mary King P.L. offers complete IRS problem-solving services including all areas from tax debt settlement to planning the most efficient tax strategy for individuals and businesses. Call us today to schedule an initial consultation. With years of experience as a tax lawyer in Florida for many clients, Attorney Mary E. King can make sure that your tax issues are resolved in your favor. Fill out our online contact form, or call us at 941-906-7585. Remember, at the Law Office of Mary E. King, we are focused on solving your tax issues for good.