After a candidacy filled with ambitious policy changes including the COVID-19 pandemic, climate change, the economy, and racial justice, President Joe Biden took office in January. Now that we’re a little over a month into Biden’s first 100 days in office, you may be wondering what his plans are regarding finances—as well as what they could mean for your money.
In this blog post, we analyze some of Biden’s economic and financial goals, any changes that have been made so far, and how new policies or initiatives may impact your personal finances.
The American Rescue Plan
What it is
The American Rescue Plan, a $1.9 trillion stimulus plan, aims to take “bold, compassionate, and aggressive action” to deliver needed relief to the Americans suffering from the impact of the COVID-19 pandemic.
What it means for you
How might the American Rescue Plan affect you personally? The stimulus package includes immediate financial relief measures such as:
- A third stimulus check of up to $1,400 per person
- An additional $400 in unemployment benefits through September
- Direct housing and nutrition assistance to families in need
- Enhanced tax credits for workers and families with children
- An extension of the eviction ban through March
The third stimulus check of $1,4000 would total $2,000 when combined with the $600 approved at the end of 2020. As for the $400 extended unemployment insurance, it would bridge the gap when previously approved $300 unemployment benefits expire on March 14.
At the time of this writing, the bill isn’t law yet, but it is expected to pass before that critical date of March 14.
Corporate Income Tax Changes
What it is
During his election campaign, Biden also discussed reversing tax cuts and policies enacted during Trump’s presidency. Instead of a policy that “rewards wealth,” Biden aims to “reward work.” Under his proposed tax plan, tax rates for individuals and corporations whose incomes exceed $400,000 would increase.
What it means for you
Biden’s tax plan will:
- Require individuals earning $400,000 or more to pay additional payroll taxes
- Raise the corporate tax rate from 21% to 28%
- Raise the top individual federal income tax rate from 37% to 39.6%
- Tax cuts for for student debt forgiveness, first-time homebuyers, health insurance and child care
- Raise the maximum Child and Dependent Tax Credit from $3,000 to $8,000
- Equalize the tax benefits of retirement plans
How this affects you specifically depends on your finances and net worth. If you have a high net worth and you expect to be impacted by tax increases, you may want to consider actions like converting your traditional IRA to a Roth IRA.
Boosted Health Insurance Coverage
What it is
On January 28th, Biden signed an executive order that opened a special enrollment period for Affordable Care Act (ACT) from February 15 to May 15. This order is meant to boost coverage for people who are uninsured.
What it means for you
If you plan to retire on or after age 65, you may have already chosen Medicare for coverage. But if you’re not eligible for Medicare yet, and you’ve struggled with finding health care coverage during the pandemic, you may find the special enrollment period convenient for you and your family.
This policy may not affect you as directly or immediately as Biden’s other plans, but remember that health insurance is a big expense you can expect to face when you retire. It’s important to consider your health insurance options before you leave your job, and if you’re planning to do that this year, it’s worth looking into any changes that will be enacted.
A Financial Advisor Can Help
If you’re feeling overwhelmed with what these leadership changes may mean for your personal finances, pause and take a break from reading about it. Zero in on what new policies and initiatives will mean for you, and stay focused on your goals. You may find that you don’t need to make any changes to your own financial plans.
In any case, a financial advisor can help you understand your options. Whether you need guidance on new tax increases, tax breaks, or changes to your retirement accounts, speak to someone on the Guiding Wealth team. Schedule a call with us today to get started.