Joe Biden's tax plan calls for “equalizing the tax benefits of retirement plans.”
Biden unveiled a tax plan that called for “equalizing the tax benefits of retirement plans,” which is written on his website. At the moment, contributions workers make to retirement plans such as 401(k)s consist of pretax dollars, which reduces those workers’ taxable income and thus their income tax liability. This benefit is currently skewed toward higher-income families and limited for low- to middle-income workers. Instead, Biden wants to “equalize” these benefits, which analysts say could emerge as a tax credit estimated at 26%, reported CNBC.
The Tax Foundation states, "Biden proposes converting the current deductibility of traditional retirement contributions into matching refundable tax credits for 401(k)s, individual retirement accounts (IRAs), and other types of traditional retirement vehicles, such as SIMPLE accounts. Biden’s proposal would eliminate deductible traditional contributions and instead provide a 26 percent refundable tax credit for each $1 contributed. The tax credit would be deposited into the taxpayer’s retirement account as a matching contribution. Existing contribution limits would remain, and Roth-style tax treatment would be unaffected."