Under Democrat Joe Biden’s federal tax plan, the top marginal tax rate in Texas could hit 49.34 percent, according to a new analysis by the Tax Foundation.
The Biden plan increases federal taxes for those paying top marginal individual income tax rates. The top marginal rate, for example would go from 37 percent to 39.6 percent, the Tax Foundation reports.
Other changes include an application of the Social Security tax on wage income above $400,000, reductions in the value of itemized deductions above a specific threshold and a capping of all itemized deductions at 28 percent.
The Tax Foundation analysis includes a scenario where the current state and local tax deduction cap is repealed – something many congressional Democrats favor, the report says. But that’s not currently included in Biden’s plan.
In Texas, the top marginal tax rate would be 49.34 percent if that cap were repealed, the analysis found. When employer contributions to payroll taxes are included in this mix, the top marginal tax rate in the state would reach 52.94 percent.
Most financial analysts agree that employees tend to bear the burden of the employer payroll contributions since such taxes result in lower wages overall, the researchers said. Employees, however, wouldn’t bear the full burden of the payroll tax effects for several years, they said.
Only a small proportion of all taxpayers would see their income affected by the Biden plan, according to the Tax Foundation. In addition, the effective tax rates imposed are below the marginal rates, which apply only to income within a specific bracket.
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Combined State, Local Top Marginal Rates Under Biden’s Tax Plan
| State | Top Rate if State and Local Tax Deduction Cap Is Repealed | Top Rate if State and Local Tax Deduction Cap Is Retained | Top Rate When Employer Contributions Are Included |
| Alabama | 52.94% | 54.34% | 57.58% |
| Alaska | 49.34% | 49.34% | 52.94% |
| Arizona | 52.58% | 53.84% | 57.12% |
| Arkansas | 54.09% | 55.94% | 59.07% |
| California | 58.91% | 62.64% | 65.29% |
| Colorado | 52.67% | 53.97% | 57.24% |
| Connecticut | 54.37% | 56.33% | 59.43% |
| Delaware | 54.09% | 55.94% | 59.07% |
| Florida | 49.34% | 49.34% | 52.94% |
| Georgia | 53.48% | 55.09% | 58.28% |
| Hawaii | 57.26% | 60.34% | 63.16% |
| Idaho | 54.33% | 56.27% | 59.38% |
| Illinois | 52.90% | 54.29% | 57.54% |
| Indiana | 51.66% | 52.57% | 55.94% |
| Iowa | 55.48% | 57.87% | 60.86% |
| Kansas | 53.44% | 55.04% | 58.23% |
| Kentucky | 52.94% | 54.34% | 57.58% |
| Louisiana | 53.66% | 55.34% | 58.51% |
| Maine | 54.49% | 56.49% | 59.58% |
| Maryland | 53.48% | 55.09% | 58.28% |
| Massachusetts | 52.94% | 54.34% | 57.58% |
| Michigan | 52.40% | 53.59% | 56.89% |
| Minnesota | 56.43% | 59.19% | 62.09% |
| Mississippi | 52.94% | 54.34% | 57.58% |
| Missouri | 53.23% | 54.74% | 57.95% |
| Montana | 54.31% | 56.24% | 59.35% |
| Nebraska | 54.26% | 56.18% | 59.29% |
| Nevada | 49.34% | 49.34% | 52.94% |
| New Hampshire | 49.34% | 49.34% | 52.94% |
| New Jersey | 57.08% | 60.09% | 62.92% |
| New Mexico | 52.87% | 54.24% | 57.49% |
| New York | 55.69% | 58.16% | 61.13% |
| New York City | 58.48% | 62.03% | 64.73% |
| North Carolina | 53.12% | 54.59% | 57.82% |
| North Dakota | 51.43% | 52.24% | 55.63% |
| Ohio | 52.79% | 54.14% | 57.40% |
| Oklahoma | 52.94% | 54.34% | 57.58% |
| Oregon | 56.47% | 59.24% | 62.13% |
| Pennsylvania | 51.55% | 52.41% | 55.79% |
| Rhode Island | 53.65% | 55.33% | 58.50% |
| South Carolina | 54.38% | 56.34% | 59.44% |
| South Dakota | 49.34% | 49.34% | 52.94% |
| Tennessee | 49.34% | 49.34% | 52.94% |
| Texas | 49.34% | 49.34% | 52.94% |
| Utah | 52.90% | 54.29% | 57.54% |
| Vermont | 55.64% | 58.09% | 61.07% |
| Virginia | 53.48% | 55.09% | 58.28% |
| Washington | 49.34% | 49.34% | 52.94% |
| West Virginia | 54.02% | 55.84% | 58.98% |
| Wisconsin | 54.85% | 56.99% | 60.04% |
| Wyoming | 49.34% | 49.34% | 52.94% |
| District of Columbia | 55.78% | 58.29% | 61.25% |
