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.
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.