Biden's Proposed Fiscal Year 2025 Budget and Capital Gains Tax Changes
Unveiling the Budget
On April 27th, 2024, President Biden unveiled his $7.3 trillion budget proposal for Fiscal Year 2025. The budget outlines several significant changes aimed at reforming the tax code, including a potential increase in the capital gains tax for high-income taxpayers.Capital Gains Tax Increase
One of the most noteworthy proposals in the budget is the potential doubling of the long-term capital gains tax rate for high-income taxpayers. The current rate of 20% could be increased to 39.6%, effectively taxing capital gains as ordinary income. This change would primarily affect individuals with taxable income above $1 million.
Implications for High-Income Taxpayers
If implemented, this increase would significantly impact individuals with substantial capital gains. The higher tax rate would reduce the potential for tax savings when selling assets, such as stocks or real estate, that have appreciated in value.
Additional Tax Changes
In addition to the proposed capital gains tax increase, the budget also includes several other tax changes, such as:
- Increasing the corporate tax rate from 21% to 28%
- Expanding the Child Tax Credit and Earned Income Tax Credit
- Closing loopholes used by wealthy taxpayers to avoid taxes
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