Biden's Tax Plan Calculator
Enter your income, filing status, age, and family details to see your estimated federal tax under current law (2021 TCJA rates) side-by-side with Biden's proposed changes. The calculator covers income tax, capital gains, the EITC, child tax credit, child care credit, and the Social Security payroll donut-hole. Results update instantly as you type.
What is Biden's tax plan?
Biden's tax proposal, put forward during and after the 2020 presidential campaign and incorporated into the American Families Plan and Build Back Better framework, aimed to raise revenue primarily from high earners and corporations while expanding tax credits for working and middle-income families. The headline change for individuals is raising the top marginal income tax rate from 37% back to 39.6% (the pre-TCJA rate) for households earning more than roughly $400,000. For everyone else, the ordinary income brackets stay the same. On top of that, Biden proposed taxing long-term capital gains and qualified dividends as ordinary income (at 39.6%) for taxpayers earning more than $1 million, replacing the preferential 20% rate those earners currently enjoy. Coupled with the existing 3.8% Net Investment Income Tax, that would push the top federal rate on investment income to 43.4%.
How the expanded credits work
The plan proposed large expansions to three major tax credits. First, the Child Tax Credit would rise from $2,000 to $3,600 per child under 6 and $3,000 per child ages 6-17, and would be made fully refundable so that families with little or no tax liability still receive the full amount. Second, the Earned Income Tax Credit for childless workers would nearly triple from a maximum of about $543 to $1,502, and the eligible age range would expand downward from 25 to 19 and upward to include workers 65 and older. Third, the Child and Dependent Care Tax Credit would increase from covering up to $3,000 of qualifying expenses (for one dependent) at a 20-35% rate to covering up to $8,000 (one dependent) or $16,000 (two or more) at a 50% rate, fully refundable for lower-income families. Together, these credit expansions mean that most working families with children would see a net tax cut under the Biden plan, even without any change to the ordinary income brackets.
The Social Security payroll donut-hole
Under current law, the 12.4% Social Security payroll tax (split evenly between employer and employee) applies to wages up to a cap ($142,800 in 2021) and then stops completely. Biden proposed reopening that tax on wages above $400,000, creating a gap - or donut hole - between $142,800 and $400,000 where no Social Security tax would apply, but above $400,000 the 6.2% employee share (and matching employer share) would resume. For a household earning $500,000 in wages, this adds about $6,200 in additional employee-side payroll tax. For most earners the payroll portion of the Biden plan has no impact, since their wages fall below the existing cap.
Who pays more and who pays less
The distributional picture is roughly as follows. Households earning under $400,000 in ordinary income and not relying heavily on long-term capital gains would generally pay the same or less in federal tax under the Biden plan, thanks to the expanded child tax credit, child care credit, and EITC. Families with young children and moderate incomes can see savings of several thousand dollars per year from the enhanced credits alone. Households earning above $400,000 would see their marginal tax rate rise by 2.6 percentage points on income above that threshold, which translates to a real but moderate increase for incomes in the $400,000-$1,000,000 range. The largest increases fall on households earning more than $1 million with significant investment income, who would face a near-doubling of the capital gains rate from 23.8% to 43.4%.
Current-law vs Biden plan: key tax changes at a glance
| Provision | Current law (2021) | Biden's proposal |
|---|---|---|
| Top income tax rate | 37% | 39.6% (above $400k) |
| Top capital gains rate | 23.8% (incl. NIIT) | 43.4% (incomes over $1M) |
| Corporate tax rate | 21% | 28% |
| Child tax credit (under 6) | $2,000 | $3,600 (fully refundable) |
| Child tax credit (ages 6-17) | $2,000 | $3,000 (fully refundable) |
| Childless EITC max | $543 | $1,502 |
| EITC minimum age (childless) | 25 years | 19 years |
| Child care credit max (1 dep.) | $600 | $4,000 |
| Child care credit max (2+ dep.) | $1,200 | $8,000 |
| SS payroll tax on wages | Up to $142,800 | Up to $142,800 + above $400k |
| Estate tax exemption | $11.7M | $3.5M |
Comparison of major federal tax provisions. Capital gains rate shown is the top rate; ordinary brackets apply to wages and other income.
Frequently asked questions
Who would pay higher taxes under Biden's plan?
Primarily individuals and households with income above $400,000. The top ordinary income rate would rise from 37% to 39.6% on income above that threshold. Households earning more than $1 million with substantial long-term capital gains would see the largest increases, because Biden proposed taxing those gains at ordinary income rates (39.6%) rather than the preferential 20% rate, pushing the effective top capital-gains rate to 43.4% when combined with the Net Investment Income Tax.
Would middle-income families pay more or less?
Most middle-income families with children would pay less, not more, because the expanded child tax credit ($3,600 for children under 6, $3,000 for ages 6-17), the larger child care credit, and the enhanced EITC would reduce their tax bill. A family earning $75,000 with two young children and paying for childcare could see a net saving of several thousand dollars per year even without any change to the income brackets.
What is the capital gains tax change under Biden's plan?
Under current law, long-term capital gains (assets held more than one year) are taxed at 0%, 15%, or 20% depending on income, plus the 3.8% Net Investment Income Tax for higher earners. Biden proposed that households earning more than $1 million would pay the same 39.6% rate on capital gains as on ordinary income, bringing the top federal capital-gains rate to 43.4% when combined with the NIIT. For earners below $1 million, the existing capital-gains rates would stay in place.
How does the child tax credit expansion work?
Under current law, the child tax credit is $2,000 per qualifying child, with up to $1,400 refundable. Under Biden's proposal (which was temporarily enacted for 2021 under the American Rescue Plan), the credit rises to $3,600 per child under 6 and $3,000 per child ages 6-17, and the full credit is refundable, meaning families with little or no tax liability still receive it as a cash payment. The additional amount above $2,000 phases out for households earning above $75,000 single or $150,000 married filing jointly.
What is the Social Security donut hole?
The current Social Security payroll tax applies to wages up to $142,800 (2021 cap) and then stops. Biden proposed restarting the 12.4% tax on wages above $400,000, creating a gap between $142,800 and $400,000 where no Social Security tax is owed. Workers earning $500,000 in wages would owe Social Security tax on the first $142,800 and on the $100,000 above $400,000, but not on the $257,200 in between.
How accurate is this calculator?
This calculator uses simplified 2021 federal parameters and approximates phase-in and phase-out ranges for credits. It does not model state taxes, the Alternative Minimum Tax, itemized deduction limits (the proposed 28% cap on the value of itemized deductions), or all nuances of the EITC formula. Use it for directional estimates and rough comparisons, not precise tax planning. A qualified tax professional or the official IRS tools will give you a more exact result.