The ‘American Families Plan’
President Biden’s American Families Plan (AFP) contains tax breaks for low- and middle-income taxpayers, as well as tax increases for those with an annual income of over $400,000. We’ve provided a short list of relevant items below. Keep in mind that Biden’s plan has not yet been approved by Congress, a feat that will likely prove challenging.
- Extend the Child Tax Credit (CTC) increases in the American Rescue Plan Act (ARPA) through 2025 and make the credit permanently fully refundable
- Permanently increase the Child and Dependent Care Credit
- Extend expanded Affordable Care Act tax credits for premiums
- Make the Earned Income Tax Credit (EITC) expansion for childless workers permanent
- Increase the top tax rate to 39.6%
- Increase the capital gains tax for “households making over $1 million”
- Reduce the “step-up in basis” at death for some taxpayers
- Revise the taxation of carried interest
- Make the excess business loss rules permanent
- Close loopholes in the 3.8% net investment income tax
These are only some of the items included in the AFP. As mentioned above, the plan must still go through Congress for approval. We’ll keep our ears to the ground and provide information and updates as the situation develops. Regardless as to the outcome of this particular Plan, the knowledgeable accountants at PP&Co can help you implement planning strategies to mitigate tax liability and maximize savings.