How Joe Biden’s Presidency May Affect Your Finances

December 7, 2020

How Joe Biden’s Presidency May Affect Your Finances

December 7, 2020

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Joe Biden and Kamala Harris winning the 2020 election could have both a direct and indirect effect on your finances. One of the direct financial changes that may take effect following Joe Biden’s presidency are changes to the tax code. Biden’s tax plan is to raise taxes on those with higher income.



Listed below are a few changes that Biden plans to pass:

  • Corporate income tax will increase to 28%
  • Those with income over $400,000 will pay a 12.4% social security tax on income split between the employers and employees
  • Those with income over $1 million with pay 39.6% long term capital gains rate on income
  • Revoke the Trump tax cuts
  • Eliminate the stepped – up basis rule

The most important change out of this list is the elimination of the stepped-up basis rule.

This rule allows you to pass assets down to your beneficiaries’ tax free once deceased if your total estate is under $11.6 million single, $23.2 million married. If passed, any estate will be taxed with unrealized gains. This can add up to an additional $40 billion of tax revenue each year. However, because the senate is split 50-48 in favor of the Republicans, Biden’s tax plan is unlikely to pass.

Another financial change is Biden’s impact on the market indirectly.

Although we cannot predict how the market may fluctuate in 2021 due to the election, history does tend to repeat itself. Since the 1920s, the U.S. Stock Market has had a tendency to be higher at the end of a presidential term. The illustration above demonstrates the growth that the U.S. Stock Market could experience during Biden’s presidency. Nevertheless, U.S. stocks rise and fall regardless of which party is in office.




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