There are a lot of questions about President Biden’s Build Back Better plan and potential tax law changes, including an adjustment to capital gains taxes.
A capital gains tax is the tax you pay on selling property or an investment where you have realized a gain. This differs from an income tax.
One of the proposals Congress is considering sets the top rate for taxing capital gains at 25%, up from 20% under current law. Another would raise the capital gains tax rate to 39.6% for taxpayers earning $1 million or more. Still another proposal would make the change to capital gains tax retroactive, with a start date of April 2021.1,2
At this point, many ideas are being considered as legislators look for ways to raise revenue to help pay for the Build Back Better plan. Corporate tax rates, individual tax rates, estate tax rules also are on the negotiating table.
As difficult as it may be, the best approach is to wait and see what happens. It would be premature to make any portfolio changes based on current discussions. An ambitious investor would have to guess what policies will be in the final bill, estimate the financial impact, and determine any needed portfolio changes. That’s a tall order.
It can be challenging to wait for Congress to act, and you may feel a bit helpless with so many pending proposals. We work with professionals who are watching every move in Washington and we may be able to offer some insight that addresses your most pressing questions. Please reach out to us if you have any concerns about the impact of capital gains taxes on your investments.
1. Bloomberg.com. September 13, 2021
2. Bloomberg.com, June 16, 2021
Information in this material is for general information only and not intended as investment, tax or legal advice. Please consult the appropriate professionals for specific information regarding your individual situation prior to making any financial decision.
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