In President Biden’s first address to Congress, he highlighted some new changes to capital-gains tax which could impact how estate planning is going to be done going forward. Biden’s plan called the “American Family Plan” is a $1.5 trillion proposal that would help fund free pre-kindergarten education and community college. Along with this is could extend child tax credit and help construct a national paid leave program. How will all of this be funded though? That is where the capital gains taxes come in.
Biden plans to up taxes on income generated from selling stocks and other long-term investments in order to help fund these new programs. The current rate of tax on these “capital gains” is 20% and could potentially double under the new plan. Biden wants to match this capital gains tax with the rate of the income tax in the higher brackets, which is currently at 37% but he wants to increase to 39.6%. While this does not seem like a large percentage increase, it could mean a lot of money that will be paid out in taxes. There are loopholes that many people use to avoid large taxes on their capital gains currently. To find out how you can avoid paying estate taxes, download our free report The Number One Strategy for Avoiding Estate Taxes here.
Biden wants to have corporate America and wealthy Americans to "pay their fair share" as he stated in his speech. This is the reason Biden is fighting so hard for this increase in taxation to pass, but nothing is set in stone yet.
Read the full article here to see who would fall under the new rules and what some economists think would really happen from all this.