Key Business and Individual Tax Provisions from the Biden Administration’s
Proposed Budget for Fiscal Year 2023
The Biden Administration proposed $5.8 trillion budget for the fiscal year 2023 includes the following key business and individual proposed tax provisions:
- Increasing the corporate tax rate from 21% to 28%. This provision would be effective for tax years beginning after 12/31/2022.
- Making permanent the New Markets Tax Credit.
- Treating carried interests held by high earners (taxpayer’s taxable income from all sources exceeds $400,000) as ordinary income.
- Limiting the benefit of like-kind exchanges to $500,000 for each taxpayer ($1,000,000 for joint filers) per tax year.
- Creating a new 10% tax credit for locating jobs in the U.S. and denying deductions for off-shoring.
- Increasing the top bracket to 39.6% for those with taxable income over $450,000 for joint filers, $400,000 for unmarried filers (except surviving spouses), and $425,000 for head of household filers. This change would be effective beginning with the 2023 tax year.
- Applying the maximum ordinary income bracket on long-term capital gains and qualified dividends for taxpayers with income of more than $1 million ($500,000 for married filing separate taxpayers).
- Treating certain transactions (including gifts and transfers at death) as deemed sales producing a current gain. The proposal indicates that taxpayers will be allowed to defer the tax on a transfer of a family owned and operated business until such business is sold or ceases to be family-owned.
- Imposing a new 20% minimum tax on total income (including unrealized gains) on those with wealth of $100 million or more for 2023 and later years.
- Making the adoption credit permanent and including guardianship arrangements to qualify.
- Making the income exclusion for student debt relief permanent.
The information presented here should not be construed as legal, tax, accounting, or valuation advice. No one should act on such information without appropriate professional advice and after a thorough examination of the particular situation.