Biden's proposed capital gains tax hike might hit wealthy Americans with 57% rate, study shows
How Biden’s capital gains tax will affect investors
BMO Capital Markets chief investment strategist Brian Belski provides insight into the possible market and economic impact of raising the capital gains tax, the Federal Reserve and earnings.
President Biden's coming proposal to increase capital gains taxes for the richest Americans could push the rate paid by investors when they sell stocks and other assets as high as 56.7% in some states.
That's according to a new study published by the Tax Foundation, which found that Biden's plan to raise the federal capital gains tax rate to 39.6% from 20% for households earning more than $1 million could lead to an average rate of 48% when factoring in state and local capital gains taxes.
WHAT BIDEN'S CAPITAL GAINS TAX PROPOSAL COULD MEAN FOR YOUR WALLET
Taxes on long-term capital gains – generally classified as an asset that's held for more than one year – currently range from 0% to 20%, depending on a person's income. Wealthier investors are also subject to an additional 3.8% tax on long- and short-term capital gains that's used to fund ObamaCare. Short-term capital gains on assets sold within a year are typically taxed as ordinary income.
Most states levy their individual income tax rates on long-term capital gains and qualified dividends. The average top tax rate on capital gains at the state level is about 5.2%. Under current law, the average rate paid by investors is about 29%, the analysis shows.