Biden Tax Proposals — US Tax Increases
- June 11, 2021
- Posted by: Hansen_Sweeney
- Categories: News, Tax
Following various factsheets, Congress addresses and the Treasury Budget Plan, increases in tax on ‘wealthy’ individuals and corporations look likely.
See below for summary of key proposals:
- Increasing the top marginal individual tax rate (from 37% to 39.6%)
- Eliminating preferential rates for taxpayers with income over $1 million, taxing long-term capital gains and qualified dividends at ordinary income rates (increase from 20% to 39.6%)
- Raising the US corporate income tax rate from 21% to 28%
- Eliminating the basis adjustment on inherited assets or treating death as an income taxable event
Most of the taxation rate changes mentioned in this blog concerning personal income, wealth transfer, and corporate taxes have a proposed effective date for tax years beginning after December 31, 2021. A key exception relates to the taxation at ordinary rates for long term capital gains and qualified dividends for taxpayers with incomes in excess of $1 million. This change is effective “after the date of announcement” according to the Treasury Budget. That reference is to April 28, 2021, when the proposal was announced in President Biden’s address to Congress. However, it is expected the date will be subject to amendment as part of the legislative process.
It remains to be seen to what extent, if any, these various proposals will become law and what sort of effect it will have on individuals and businesses that operate internationally.