Forbes

Biden's Budget Proposes Major Capital Gains Tax Hike for High Earners

Substantial Increase Targeted for Long-Term Investments

President Biden's recently released budget proposal includes a significant increase in the capital gains tax rate for high-income taxpayers. If enacted, this change would nearly double the long-term capital gain tax rate from the current 20% to 39.6%.

Implications for Investors

Long-term capital gains, which apply to investments held for more than one year, have traditionally been taxed at lower rates than ordinary income. This preferential treatment has been a major incentive for long-term investment. However, the proposed increase could potentially discourage investment and negatively impact economic growth.

Taxpayers Affected

The proposed capital gains tax hike would apply to individuals with taxable income above certain thresholds. In 2024, individuals with taxable income over $470,250 would be subject to the higher rate. This threshold is expected to be adjusted annually for inflation.

Impact on the Budget

According to the Biden administration, the proposed capital gains tax increase is estimated to raise an additional $325 billion over the next decade. This revenue would be used to fund various government programs and reduce the national debt.

Financial Samurai