In a recent tweet, President Biden expressed his pride in the $2 trillion tax cut implemented by former President Donald Trump. However, he emphasized that the tax cut, which primarily benefited the wealthy and large corporations while increasing the federal debt, is set to expire. If reelected, Biden stated that he intends to keep the tax cut expired.
The tax cut was enacted in 2017 and brought significant changes to the nation’s tax code. Notably, it reduced the top individual income tax bracket from 39.6% to 37% and nearly doubled the standard deduction. Nevertheless, these modifications to the individual section of the tax code are scheduled to sunset in 2025. Consequently, if the law is not extended, many taxpayers, including those earning less than $400,000, will face higher taxes.
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- 4 Tax brackets for single individuals pre-TCJA:
- 5 Tax brackets for single individuals under TCJA:
Biden Takes Action to Address Inappropriate Retirement Guidance
The Biden administration has implemented a new regulation aimed at curbing inadequate retirement advice. This move signifies the administration’s commitment to protecting Americans’ financial well-being during their retirement years.
This rule is designed to provide individuals with clearer and more transparent information when seeking retirement advice. It seeks to eliminate any conflicts of interest that may arise between financial advisors and their clients. By doing so, the administration hopes to ensure that individuals receive advice that is in their best interest and not influenced by potential financial gains for the advisor.
The new regulation requires financial advisors to act as fiduciaries when providing retirement advice. This means that they must act solely in the best interest of their clients and prioritize their clients’ financial goals. Additionally, advisors must disclose any potential conflicts of interest that may exist.
The implementation of this rule is an important step towards safeguarding individuals’ retirement savings. It aims to prevent situations where individuals receive advice that benefits the advisor more than the client. With this regulation in place, Americans can have greater confidence in the advice they receive and make more informed decisions about their retirement planning.
The Biden administration’s focus on addressing inadequate retirement advice demonstrates their commitment to protecting the financial well-being of Americans. By promoting transparency and putting the interests of clients first, this rule aims to ensure that individuals can retire with confidence, knowing that their financial future is secure.
Tax brackets for single individuals pre-TCJA:
- 10%: Taxable income up to $9,525
- 15%:ย Taxable income over $9,525
- 25%:ย Taxable income over $38,700
- 28%:ย Taxable income over $93,700
- 33%:ย Taxable income over $195,450
- 35%:ย Taxable income over $424,950
- 39.6%:ย Taxable income over $426,700
Remote workers are at risk of facing double taxation.
The Internal Revenue Service (IRS) building in Washington, D.C. on January 24. (STEFANI REYNOLDS/AFP via Getty Images / Getty Images)
Tax brackets for single individuals under TCJA:
In 2024, the current tax law outlines the following individual income tax brackets:
- 10%: Taxable income up to $11,600
- 12%:ย Taxable income over $11,600
- 22%:ย Taxable income over $47,150
- 24%:ย Taxable income over $100,525
- 32%:ย Taxable income over $191,950
- 35%:ย Taxable income over $243,725
- 37%:ย Taxable income over $609,350
According to the Tax Foundation, when the tax law expires on Dec. 31, 2025, it will result in many Americans having to pay an additional 1% to 4% in taxes, unless specific provisions are extended or made permanent.
Biden falls behind Trump in most battleground states as voters become disillusioned with the state of the US economy.
The subject is expected to be a point of disagreement during the upcoming general election. If re-elected in November, Trump has promised to make the tax cuts a permanent fixture. Previously, Treasury Secretary Janet Yellen hinted that President Biden would aim to preserve the tax reductions for individuals earning less than $400,000 if he were to serve a second term in the White House.
According to a White House official, Biden’s tweet serves as a reaffirmation of the president’s budget proposal. The tweet emphasizes that tax cuts would be allowed to expire for individuals earning over $400,000, while remaining in place for lower- and middle-income Americans who earn less than $400,000.
President Biden addressed the audience at the Pieper-Hillside Boys & Girls Club in Milwaukee on March 13. (Alex Wroblewski for The Washington Post via Getty Images / Getty Images)
Extending the TCJA poses a challenge as the Congressional Budget Office projects a potential increase of around $3.7 trillion to the federal budget deficit.
The SALT deduction cap, which restricts the amount of state and local taxes that Americans can deduct from their federal taxes to $10,000, played a role in financing the original law. However, this cap is set to expire in 2025.
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Since 2017, the effectiveness of the SALT cap as a revenue generator has diminished due to the emergence of new loopholes.
According to York, lawmakers should anticipate the approaching expirations, even if they don’t address them this year. It is important for them to carefully consider the pros and cons of each change that was made to the tax law in 2017. The goal should be to establish a tax code that not only fosters economic growth and opportunity but also avoids exacerbating the national debt.
