With the Democrats holding a majority of the Senate, assuming Vice-President Kamala Harris’ tie-breaking vote, we should expect to see some action on President Joe Biden’s tax plan.

Biden’s tax proposals to date have been quite progressive, primarily focusing on traditional redistribution of tax – higher taxes on income and estates for wealthy individuals. The President also proposes a number of credits and deductions aimed to provide relief for middle- and lower- income families. It is not clear at this time whether the proposals will have the desired outcome, or potentially create a heavier tax burden for all Americans.

Tax the Rich, Credit the Poor and Middle-Income Earner
The Tax Cuts and Job Act (TCJA) of 2017 reduced the top income tax rate to 37%, a drop from 39.6%. However, this reduction only lasts through 2025 when the TCJA expires. Biden’s plan would expedite that reversion, moving rates back to 2016 levels, and bring back the 28% cap on itemized deductions which was also repealed by the TCJA through 2025.