Capital Gains Tax Hike Proposed in Biden's FY25 Budget
Biden's FY25 Budget Proposal: A Major Shift in Capital Gains Taxation
Proposed Capital Gains Tax Increase Would Impact High-Income Investors
In a significant departure from current tax policy, President Joe Biden's proposed Fiscal Year 2025 Budget of the United States Government includes a substantial increase in the capital gains tax rate. The proposed increase would nearly double the capital gains tax rate to 39.6%, impacting investors who make at least $1 million in long-term capital gains.
Currently, long-term capital gains (assets held for more than one year) are taxed at lower rates than ordinary income, while short-term capital gains (assets held for one year or less) are taxed as ordinary income. Under the proposed changes, the capital gains tax rate would increase for both long-term and short-term gains for high-income earners.
For taxable income above $518,900 in 2023 and 2024, the top capital gains tax rate would be 20%. However, Biden's proposed 2025 budget would increase this top capital gains tax rate to 44.6%. This proposed rate increase, coupled with state taxes, could significantly impact high-income investors.
Experts are analyzing the potential implications of this proposed tax hike, and its potential impact on investment behavior and economic growth. The proposal is expected to face scrutiny and debate as it makes its way through the legislative process.
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