Biden Proposes Major Capital Gains Tax Increase

Long-term and Qualified Dividends Rates to Rise to 37 Percent

President Biden's 2025 Budget Proposal Includes Tax Changes Targeting Wealthier Taxpayers

In his proposed Fiscal Year 2025 Budget, President Biden has included several tax changes aimed at increasing revenue from wealthier taxpayers. One of the most talked-about components of the budget is the proposed increase in capital gains taxes.

Under current law, long-term capital gains are taxed at lower rates than ordinary income. For taxpayers in the highest income bracket, the long-term capital gains rate is 20 percent. President Biden's proposal would raise the long-term capital gains rate to 37 percent for taxpayers with taxable income above $1 million.

In addition to increasing the long-term capital gains rate, President Biden's proposal would also raise the qualified dividends rate to 37 percent for taxpayers with taxable income above $1 million. Qualified dividends are dividends paid by U.S. corporations that have been held for more than two years.

The proposed capital gains tax increase is part of a broader effort by President Biden to raise revenue from wealthier taxpayers. Other tax changes included in the budget proposal include a minimum tax on billionaires and a surtax on high-income earners.

Forbes

Forbes