Among the many law changes that congress has already enacted, another tax law change which taxpayers should possibly prepare for is President Biden’s recent tax proposal regarding capital gains.

The President’s proposal would be to tax long-term capital gains on ordinary income for taxpayers with taxable income above $1,000,000 and to raise the top marginal income tax rate to 39.6%. In addition, the Net Investment Income Tax would be assessed which tacks on an extra 3.8% in tax, and the average top state capital gains tax rates would be added on. The proposal would bring it to a combined total rate of 48.6%.

President Biden’s proposal could also be retroactive to April 28,2021, curtailing possible tax planning for those who have already had recent capital gain transactions.

Now, the increase will depend on whether the Senate and the House can uniformly support the President’s proposal.

We will see what happens as things continue to develop in the coming months.

For questions about this recent tax proposal regarding capital gains, please contact the office.