Biden's Proposed Budget Increases Capital Gains Tax Rates

FY25 Budget Proposal

President Biden's proposed budget for Fiscal Year 2025 includes a significant increase in the top capital gains tax rate. This proposal would nearly double the current rate of 20% to 39.6%.

Impact of the Proposed Increase

The proposed capital gains rate increase would apply to individuals with taxable income above $400,000 for single filers and $450,000 for joint filers. It is estimated that this change would raise an additional $120 billion in revenue over the next decade.

This proposed increase is part of a broader effort by the Biden administration to raise taxes on high-income earners. The administration argues that this is necessary to address income inequality and fund important government programs.

Context and Congressional Outlook

The main proposal which lends context to the above-mentioned separate proposal is to raise the long-term capital gains and qualified dividend income tax rate from 20 percent to 39.6 percent for taxpayers with taxable income above $1 million. This proposal would increase revenue by an estimated $120 billion over 10 years.

The budget proposal also includes a number of other tax changes, including raising the corporate income tax rate from 21% to 28%, increasing the estate tax rate, and expanding the child tax credit. These changes are expected to raise an additional $2.5 trillion in revenue over the next decade.

The Biden administration's budget proposal is likely to face significant opposition from Republicans in Congress. Republicans have generally opposed tax increases, and they are likely to argue that the president's proposals would harm the economy and lead to job losses.

It is too early to say whether the Biden administration's budget proposal will be passed by Congress. However, the debate over tax policy is likely to continue in the coming months.