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Washoe County Medical Society

Financial Challenges For High Earners During a Biden Administration Keeping Up with COVID19

Joe and Eric Hollen Open Studios

With one of the most contentious elections in history behind us, President Joseph R. Biden, Jr. took office on January 20, 2021.

With a new administration, high earners especially are left wondering - how will the Biden presidency affect me financially?

Until Biden begins enacting changes, we won’t know for sure what to expect. But based on his official campaign platform, past interviews, and projections, we can begin preparing for potential challenges to high earners.

Challenge #1: Expect Higher Taxes

Much of Biden’s tax plan focuses on raising taxes for high earners, corporations, and capital gains. It’s estimated that approximately 80 percent of tax increases would affect the top one percent of income earners.1

For those earning over $400,000 annually, Biden is projected to raise taxes including individual income, capital gains, and payroll taxes.2 Households with an adjusted gross income of $400,000 a year or less will likely see less dramatic tax changes, if any changes at all.

Under Biden’s proposed tax plan, corporate tax rates are expected to rise to 28 percent, up from the current 21 percent. Additionally, he may set a minimum tax of 15 percent on shareholders’ profits and increase the taxes on foreign earnings of companies overseas.3

Challenge #2: Deductions May Be Limited

Under Biden’s proposed tax plan, most deductions, including retirement account contributions and qualified charitable contributions may essentially be limited to an approximate 28 percent maximum deduction. The details of this change would benefit taxpayers in lower brackets, while those in the higher brackets would lose some of the value of traditional deductions.4 These changes could make Roth-type contributions more valuable for higher earners.

Challenge #3: Real Estate Loopholes Could Be Eliminated

If rumors that Biden may eliminate the Section 1031 like-kind exchange become true, real estate investors would lose the ability to utilize this common workaround for tax deferment. These types of exchanges have taken place in the real estate industry for years and have been a part of the IRS code since 1921.5 Under current law, real estate investors can delay capital gains taxes when they sell properties and direct earnings into new investments - assuming they follow the IRS’s regulations as to what defines eligibility for Section 1031 exchanges.

Challenge #4: Elimination of Fossil Fuel Subsidies

For oil industry executives, the elimination of fossil fuel subsidies could affect your earnings. As of September 2020, this industry is said to be worth $14 trillion in assets.6

Biden is pushing to end U.S. fossil fuel subsidies worth billions of dollars a year in an effort to combat climate change and reach net-zero emissions within 30 years.7

Challenge #5: Reverses to the Tax Cuts and Jobs Act of 2017

The Tax Cut and Jobs Act of 2017 included several advantageous tax changes for high earners and business owners - including dropping corporate taxes from 35 percent to 21 percent.8 Biden is predicted to eliminate some aspects of the TCJA, likely reversing certain tax breaks for corporations and high-earners.

Challenge #6: Raising of Estate and Gift Taxes

Biden has been cited as saying he’d likely restore estate and gift taxes to pre-TCJA levels.3 Any eligible assets gifted above that amount would be likely taxed at a rate of 40 percent - unless the Biden administration changes it otherwise.9

We could begin seeing changes soon. If you’re unsure whether or not your financial situation could be affected, reach out to us. Together, we can plan and prepare for what may be coming down the line for you and your future taxes. Learn more at
You can read more here about the measured actions that we’ve considered for clients while Planning for a Biden Administration (
Or consider taking a deep-dive on tax planning through this presidential cycle and the next (2024)(
Please consider obtaining professional guidance for your own unique situation, and, as always, we wish each of you every financial success.

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