What You Need to Know
- That's far short of the 39.6% rate that President Biden had proposed.
- The new rate would apply to those in the top tax bracket for long-term capital gains.
- The plan also leaves intact the step-up in basis for assets at death.
House Democrats presented a smaller-scale overhaul of the way investments are taxed than President Joe Biden proposed earlier this year, highlighting the political challenge in enacting higher levies ahead of next year’s midterm elections.
The plan, released by the House Ways and Means Committee Monday, sets the top rate for taxing capital gains — money earned from the sale of assets such as stocks or property — at 25%, up from 20% under current law. Including a 3.8% Medicare surtax on high earners, the top capital gains rate would be 28.8%, taking effect in tax years ending after Sept. 13, 2021.
That’s far short of the 39.6% rate — or 43.4% including the surtax — Biden proposed for those earning $1 million or more.