President Joe Biden and Vice President Kamala Harris released their 2020 tax returns Monday, restoring the annual White House tradition.
The president and first lady, Jill Biden, reported $607,336 in adjusted gross income, putting them in the top 1% of filers, according to IRS data. The Bidens paid $157,414 in federal taxes, a rate of 25.9%.
Harris and second gentleman Doug Emhoff, an attorney, reported $1,695,225 in adjusted gross income. They paid $621,893 in federal taxes, a 36.7% rate.
Biden and Harris also shared financial disclosures for 2020.
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The Bidens revealed joint assets valued between $1.2 million and almost $2.9 million, while Harris and Emhoff’s assets are worth between $3 million and nearly $7 million.
“Overall, they’re pretty clean,” said Karl Schwartz, certified financial planner and certified public accountant at Team Hewins in Boca Raton, Florida.
While the returns didn’t unveil any financial bombshells, tax experts say a few details are worth noting.
While a large chunk of the Bidens’ income came from pensions, they also received $200,000 in wages through their company, structured as an S-corporation.
“There are ways of mitigating your tax when you have your own corp like that,” said Eric Pierre, an Austin, Texas-based certified public accountant and owner at Pierre Accounting.
These so-called pass-through businesses may allow owners to avoid self-employment taxes on part of their company income. The Biden’s S-corporations provided significant tax savings in 2017 and 2018.
Most of Harris and Emhoff’s income came from Emhoff’s work as a partner at his law firm, DLA Piper.
With incomes well over the $400,000 threshold, both couples may be impacted by Biden’s proposed tax hikes.
Capital gains levies may be less of a concern, however. Neither return had significant capital gains income, Pierre said.
Another striking detail is how much each couple spent on state and local taxes, Pierre said.
Overall, they’re pretty clean.Karl Schwartzcertified public accountant at Team Hewins
The Bidens had $90,289 in state and local taxes, or SALT, but couldn’t claim a deduction for more than $10,000.
The same $10,000 limit applied to Harris and Emhoff, who racked up a whopping $280,421 in state and local taxes.
This so-called $10,000 SALT deduction cap was a last-minute addition to former President Donald Trump’s signature tax overhaul in 2017.
Before the Tax Cut and Jobs Act, filers could deduct their full amount of SALT, a massive write-off for high-tax areas.
“That’s a pretty substantial deduction that’s being taken away,” said Schwartz.
The administration hasn’t called for ending the Trump-era $10,000 cap on state and local taxes, but the first and second families would significantly benefit from the change.
Repealing the $10,000 SALT deduction cap has become a sticking point among lawmakers in high-tax states, threatening to derail Biden’s American Families Plan.
Ditching the SALT deduction cap may not help most Americans, however.
Fewer than 10% of households would benefit, with 96% of the tax cut going to the top 20%, according to the Tax Policy Center.