Is the Biden administration expected to change tax treatment of capital gains?
During his campaign, then-candidate Joe Biden outlined a plan to increase the tax rate on long-term capital gains for taxpayers earning over $1 million per year. A capital gains tax is a tax on the profits earned from the sale of an asset, like a stock or a property.
The campaign website discusses an increase in the top rate on long-term capital gains from 20% to 39.6%, restoring the tax to the level in 2012, when Biden was vice president. Proposed reforms would close loopholes that previously allowed some to avoid the capital gains tax, and double it for the super-wealthy. The president’s push for a large COVID relief package has taken priority over enacting these and other tax changes, however.
Long-term capital gains and dividends are the second-largest tax expenditure in the tax code. The tax could account for up to $167.5 billion in the fiscal year 2021, estimates predict.
