Here’s an overview of what President Biden has proposed
President Biden’s first address to a joint session of Congress introduced several proposed tax policy changes. These proposals will fuel much debate in Congress and, no doubt, will emerge much changed by the contest of the legislative process. Nonetheless, it makes sense to understand the battlefield. So, here goes.
Some of the notable proposals:
- Ordinary income: Restoring the top income tax rate to 39.6 percent for those with income greater than $400,000
- Capital gains and dividends: Doubling the tax rate on capital gains and dividends to 39.6 percent for households making more than $1 million
- Step-up basis: Repealing the step-up in basis of inherited assets for gains in excess of $1 million ($2.5 million per couple) with protections for family-owned businesses and farms
- Carried interest: Raising the taxes that hedge fund and private equity partners pay on carried interest from capital gains to ordinary income tax rates
- 1031 exchange: Ending the 1031 like-kind exchange rules, eliminating the ability to defer capital gains tax on real estate exchanges for gains above $500,000
We will continue to monitor this and provide updates.