Biden's Proposed Budget Could Significantly Increase Capital Gains Tax

President Biden's 2025 budget proposal includes a significant increase in the top capital gains tax rate, from 20% to 44.6%.

This change could have a major impact on investors, especially those with high incomes.

Under current law, the top capital gains tax rate is 20% for assets held for more than one year. This rate applies to both long-term capital gains (on assets held for more than one year) and short-term capital gains (on assets held for one year or less).

President Biden's proposed budget would increase the top capital gains tax rate to 44.6% for high-income earners. This would be a significant increase, and it could have a major impact on investors, especially those with high incomes.

The proposed change would also eliminate the stepped-up basis for capital gains at death. This means that when an asset is passed on to heirs, the heirs would be responsible for paying capital gains tax on the difference between the asset's value when it was inherited and its value when it is sold.

The proposed changes to the capital gains tax are likely to be controversial. Some argue that the changes are necessary to raise revenue and reduce inequality. Others argue that the changes would discourage investment and hurt the economy.

The proposed changes are still in the early stages of the legislative process, and it is unclear whether they will be enacted into law. However, the proposals have already sparked a debate about the future of capital gains taxation in the United States.