Biden Potentially Raising Capital Gains Taxes
Biden will be speaking at a join session of Congress where he is expected to announce his changes to the capital gains tax code. Currently, the top tax bracket for ordinary income is 37%, while capital gains have a top rate of 20%. Both types of income are potentially subject to another 3.8%, either in payroll or investment taxes. Therefore top income tax rates are 40.8% and top capital gains tax rates are 23.8%.
Biden's proposal is to raise the current 37% ordinary income cap to 39.6%. However, the more drastic move is to raise the tax rate on capital gains to 39.6% for earners with income over $1 million.
There have been no announcements on whether there will be changes to the Opportunity Zone tax incentives although given these were created under a bi-partisan push by Congress it is not expected to change at this time. The capital gain tax break for ten year QOZ investments will become much more valuable should Biden be successful with his new taxation plan.