Your Eyecare Business Is Unlikely to Pay Higher Income Taxes Under Biden: Treasury
Ninety-seven percent of small business owners won’t face an income tax increase if President Biden’s tax plan becomes law, according to a recent analysis from the U.S. Department of the Treasury.
The analysis looked exclusively at small businesses filing as S-corporations, partnerships and on individual income tax returns. The Treasury said nearly every small business falls into these categories and is thus not subject to a corporate tax. Instead, these businesses report income on the owner’s individual tax return and are taxed at individual income rates.
Under Biden’s plan, the corporate tax rate would rise from 21 percent to 28 percent, and the top marginal individual income tax rate would be restored to 39.6 percent. These changes would affect less than 3 percent of small businesses, according to the analysis.
The White House said the increased tax revenue would go toward investments in education, child care and fighting climate change. The administration’s full statement on the Treasury analysis can be found here.
For its part, the U.S. Chamber of Commerce opposes the tax hikes, saying there are 1.4 million small businesses that file as C-corporations and will have to pay a corporate tax. There are more than 30 million small businesses in the U.S., according to the Small Business Administration.