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Biden’s Tax Agenda
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Article Highlights: Capital Gains Medicare Tax High Wealth Minimum Tax Top Marginal Tax Rate Corporate Tax Rate Corporate Minimum Tax Global Minimum Tax Basis Step-Up Carried Interest Stock Buyback Tax Executive Compensation Private Jets Like-Kind Exchanges Cryptocurrency Losses Cryptocurrency Mining Estate and Gift Taxes Oil and Gas Tax Incentives Child Tax Credit Earned Income Tax Credit Premium Tax Credit High-Income Taxpayers Retirement Account Contributions During his State of the Union Address before Congress on March 7, 2024, President Biden presented an overview of his tax agenda proposed for the 2025 fiscal year budget. The White House also released a fact sheet with highlights of the President’s tax proposals along with an analysis of the need and benefits of the proposed changes. Here is a general overview of the proposed tax changes: Capital Gains – At the center of the President’s proposal is an increase in the capital gains tax for higher income taxpayers. For several years, long-term capital gains and qualified dividends have been taxed at preferential rates of 0%, 15% or 20%, with the capital gains rates depending on the taxpayer’s taxable income. 2024 CAPITAL GAINS RATE RANGES Filing Status 0% Rate 15% Rate 20% Rate Single 0 - $47,025 $47,026 - $518,899 $518,900 & Above Head of Household 0 - $63,000 $63,001 - $551,349 $551,350 & Above Married Filing Joint 0 - $94,050 $94,051 - $583,749 $583,750 & Above Married Filing Separate 0 - $47,025 $47,026 - $291,849 $291,850 & Above The budget proposal would increase the capital-gains tax rate to equalize the taxation of investment and wage income. That would mean capital gains for those with taxable incomes of at least $1 million would be taxed at a base rate of 39.6%, up from the previous maximum of 20%. The 39.6% rate is an increase from the current top rate of 37% (see more below). Medicare Tax – Currently there is a Medicare surtax of 3.8% of the lesser of the taxpayer’s net investment income or the excess of the taxpayer’s modified adjusted gross income over the threshold amount ($250,000 for a joint return or surviving spouse, $125,000 for a married individual filing a separate return, and $200,000 for all others). Note: These amounts are not indexed for inflation. The budget proposal would increase the 3.8% Medicare tax to 5% for those with earnings in excess of $400,000. The purpose of this proposed increase is to shore up the Medicare trust fund. This would result in a 44.6% (39.6% plus 5%) federal rate for the richest taxpayers. Under current law some business owners can avoid Medicare taxes on some of the profits they get from pass-through businesses, such as S corporations. The President’s Budget proposal closes this loophole. It is interesting to note that President Biden benefited from the current law in the past as he set up an S corp to receive the income from his lectures and book royalties, thus avoiding Medicare taxes on some of that income. High Wealth Minimum Tax – The budget proposal includes a 25% minimum tax rate on income of families worth $100 million or more. This would require an annual determination of a taxpayer’s net worth, which in itself would be complicated for families near the $100 million threshold. Top Marginal Tax Rate – Currently the top personal marginal tax rate is 37%. The budget proposal would increase the top personal-income tax rate to 39.6% for those making more than $400,000 ($450,000 for joint filers). This higher rate would reverse a tax cut that was part Tax Cuts and Jobs Act (TCJA) set to expire after 2025. Corporate Tax Rate – Currently the federal corporate tax rate is a flat rate of 21% set by the TCJA and scheduled to expire after 2025. The budget proposal would increase the corporate tax rate to 28%. Corporate Minimum Tax – The President also proposes increasing the current 15% corporate minimum tax on domestic companies to 21%. Global Minimum Tax - Also proposed is adopting the under-taxed profits rule included in the Organization for Economic Cooperation and Development's global minimum tax, which would allow the U.S. to tax a company if it is paying below a 15% rate and the country where the business is headquartered also isn't applying the 15% minimum rules.
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Tax and Financial Insights
by NR CPAs & Business Advisors
2026 IRS Mileage Rates: Key Updates and Insights
The IRS has rolled out the inflation-adjusted mileage rates for 2026, offering taxpayers an efficient way to claim deductions for vehicle-related expenses incurred for business, charity, medical, or moving purposes. These adjustments reflect the continued economic shifts impacting car operation costs.
Effective January 1, 2026, the new standard mileage rates are established as follows:
- Business Travel: Increased to 72.5 cents per mile, inclusive of a 35-cent-per-mile depreciation allocation. This marks a rise from the 70 cents per mile rate set for 2025
- Medical/Moving Purposes: Reduced slightly to 20.5 cents per mile, down from 21 cents in the previous year, reflecting the variable cost considerations.
- Charitable Contributions: Consistent at 14 cents per mile, a fixed rate unchanged for over a quarter-century.
As is typical, the business mileage rate considers the integral fixed and variable costs of automobile operation. Meanwhile, the medical and moving rates remain contingent on variable expenses as determined by the IRS study.
It is critical to note that the One Big Beautiful Bill Act (OBBBA) held firm on disallowing moving expense deductions except for specific cases within the Armed Forces and intelligence community, marking a substantial shift since 2017.
When engaging in charitable work, taxpayers might opt for a direct expense deduction over the per-mile method, covering gas and oil costs. However, comprehensive upkeep and insurance costs are non-deductible expenses.
Business Vehicle Use Considerations: Taxpayers can alternatively compute vehicle expenses using actual costs, which might benefit from shifting depreciation rules, particularly through bonuses and first-year advantages. Keep in mind, however, reverting from actual cost calculations to standard rates in subsequent years is restricted, particularly per vehicle protocol and when exceeding four vehicles in concurrent use.
Additionally, parking, tolls, and property taxes attributable to business can be deducted independently of the general rate, an often-overlooked advantage by many business owners.
Tax Strategies for Employers and Employees: Reimbursements based on the standard mileage framework, providing the right documentation is in place, remain tax-free for employees. Meanwhile, the elimination and continued prohibition of unreimbursed employee deductions continue, with particular exceptions offered to qualified personnel across specific occupations.
Opportunities for Self-employed Individuals: Entrepreneurs remain eligible for deductions on business-related vehicle use via Schedule C, with potential to account for business-use interest on auto loans.
Heavy SUVs and Deduction Advantages: Heavier vehicles exceeding 6,000 pounds but under 14,000 pounds open opportunities for substantial tax deductions through Section 179 and bonus depreciation avenues. The lifecycle of such a vehicle bears implications on recapturing initially claimed deductions, urging cautious tax planning.
For professional guidance on optimizing your vehicle-related tax deductions and understanding their implications on tax strategies, contact our office in Coral Gables, Florida, where expert advice and strategic insights are just a call away.
Educator's Deduction Reform: Key Changes Under OBBBA
The One Big Beautiful Bill Act (OBBBA) introduces significant enhancements for educators' tax deductions starting in 2026, offering both strategic opportunities and planning considerations for educators who qualify. With the reinstated itemized deduction for qualified unreimbursed expenses, educators have a broader spectrum of financial relief. This is complemented by the retention of the $350 above-the-line deduction, allowing educators to maximize their tax benefits by selectively allocating expenses between these avenues.
Understanding the nuances of these changes is crucial for educators and financial advisors alike. The dual-option deduction strategy can potentially enhance tax efficiency, thereby aligning with broader financial planning goals.
At NR CPAs & Business Advisors, based in Coral Gables, Florida, our expertise in tax preparation and planning provides invaluable support to educators navigating these changes. Our comprehensive approach, combined with personalized advice from our experienced team, ensures compliance and optimization in line with the latest tax legislations.
Given these updates, it is imperative to engage with seasoned professionals to fully leverage your deduction strategies. Contact us today to streamline your tax planning under OBBBA's new guidelines and maximize your deductions for upcoming tax years.
