Significant Increase From Current Rates

President Biden's Proposed Budget Raises Top Capital Gains Tax Rate to 44.6%

Significant Increase from Current Rates

President Biden's proposed budget for fiscal year 2025 includes a significant increase in the top capital gains tax rate, which could reach 44.6%. This proposed tax rate increase would apply to investors who make at least $1 million in capital gains.

38% Net Investment Income Tax (NIIT) and Additional Medicare Tax

This proposed capital gains tax rate increase is in addition to the existing 38% Net Investment Income Tax (NIIT) and the additional Medicare tax that high-income earners pay.

The 44.6% rate is based on a footnote in the General Explanations of the Administration's FY 2025 Revenue Proposals. The footnote states that a separate proposal in President Biden's budget would nearly double the capital gains tax rate to 39.6%.

When combined with state taxes, the proposed capital gains tax rate increase could reach even higher levels. This would make it one of the highest capital gains tax rates in the world.