Biden's Budget Proposal Could Nearly Double Capital Gains Tax Rate to 44.6%

Proposed Tax Increase Would Apply to Investors Making at Least $1 Million

President Biden's FY 2025 budget proposal includes a significant increase in the top capital gains tax rate to 44.6%. The proposed tax rate, which would apply to investors making at least $1 million, would nearly double the current rate of 23.8%.

The source of the 44.6% rate is a footnote from the General Explanations of the Administration's FY 2025 Revenue Proposals. It reads, in relevant part, "A separate proposal...Biden's FY25 budget proposal would nearly double that capital gains tax rate to 39.6%."

The proposed capital gains tax rate increase is part of a broader effort by the Biden administration to raise taxes on high-income earners. The budget proposal also includes a number of other tax increases, such as an increase in the top marginal income tax rate from 37% to 39.6%.

The proposed tax increases are likely to face opposition from Republicans in Congress. However, the Democrats have a narrow majority in both the House and Senate, and they may be able to pass the budget proposal without Republican support.