Biden Calls for Capital Gains Tax Hike
As expected, President Biden included a capital gains tax increase for millionaires in his American Families Plan.
- (opens in new tab)
- (opens in new tab)
- (opens in new tab)
- Newsletter sign up Newsletter

When President Biden addresses the nation tonight, he's going to lay out a massive plan designed to "investment in our kids, our families, and our economic future." This plan – called the American Families Plan – would provide paid family and medical leave, free pre-school and community college, tax breaks for low- and middle-income people, limits on child-care costs, scholarships for future teachers, and much more.
To help pay for his plan, the president wants to boost taxes on the wealthy. He's offering a number of ways to do this – including by raising the capital gains tax for people earning $1 million or more. Of course, there's no guarantee the proposed capital gains tax hike will ever materialize. The president's plan must be passed by Congress before he can sign it into law – and he'll have a fight on his hands to get that done. So, wealthy investors shouldn't panic quite yet…but you might want to start thinking about a future with higher capital gains rates now just in case.
Biden's Plan to Increase the Capital Gains Tax
Under current law, gains from the sale of stocks, mutual funds, and other capital assets that are held for at least one year are taxed at either a 0%, 15%, or 20% rate. The highest rate (20%) is saved for wealthier taxpayers – i.e., single filers with taxable income over $445,850, head-of-household filers with taxable income over $473,750, and married couples filing a joint return with taxable income over $501,600.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
However, under the president's American Families Plan, anyone making more than $1 million per year would have to pay a 39.6% tax on long-term capital gains. That's nearly twice as much as the current rate.
Essentially, the idea is for millionaires to pay the same tax on long-term capital gains that they would pay on ordinary income, such as wages. Right now, the top tax rate on ordinary income is 37%, but Biden also wants to boost that rate to 39.6%, which is the same top rate that applied before former President Trump's 2017 tax reform act.
Surtax on Net Investment Income
Don't forget about the 3.8% surtax on net investment income (e.g., taxable interest, dividends, gains, passive rents, annuities, and royalties). This extra tax hits single taxpayers with a modified adjusted gross income over $200,000 and joint filers with a modified AGI over $250,000. Biden hasn't suggested doing away with or otherwise modifying this extra tax, which means millionaires could see the overall tax rate on capital gains soar to 43.4%.
Will Congress Pass a Capital Gains Tax Hike?
Getting a capital gains tax increase through Congress and onto the president's desk won't be easy. Republicans will oppose it, and there will most likely be some Democrats that aren't thrilled with the idea, either. Perhaps a smaller capital gains tax rate increase will pass – say, with a top rate of 25% to 30%, instead of 39.6%. Raising taxes on individuals in general will be more difficult than increasing taxes on corporations, too.
The president's American Families Plan includes other "tax the rich" provisions, so there will be a lot of back-and-forth in Congress to find the right mix of tax hikes on the wealthy to pay for the proposed benefits and tax breaks for middle- and lower-income Americans. Whether a capital gains rate change can ultimately make it into the final bill remains to be seen.
Rocky was a Senior Tax Editor for Kiplinger from October 2018 to January 2023. He has more than 20 years of experience covering federal and state tax developments. Before coming to Kiplinger, he worked for Wolters Kluwer Tax & Accounting and Kleinrock Publishing, where he provided breaking news and guidance for CPAs, tax attorneys, and other tax professionals. He has also been quoted as an expert by USA Today, Forbes, U.S. News & World Report, Reuters, Accounting Today, and other media outlets. Rocky has a law degree from the University of Connecticut and a B.A. in History from Salisbury University.
-
-
In Retirement Planning, What’s Your Retirement Personality?
There are many ways to think about retirement planning, and your personality can influence yours. If your personality and plan match, you have a greater chance of retirement success.
By Samuel V. Gaeta, CFP® • Published
-
Inflation’s Toll: Cuts to Retirement Savings and Health Care
Many consumers struggling to make ends meet amid inflation are reducing retirement planning and health care, both of which can have disastrous results later in life. A professional could help.
By Kristi Martin Rodriguez • Published
-
When Can You File Taxes in 2023? (Hint: It's Very Soon)
tax filing If you're an early bird when it comes to filing your tax return, you won't have to wait much longer before the IRS will accept your return.
By Rocky Mengle • Published
-
New EV Tax Credit Gets Complicated for 2023
More car models qualify for the full federal electric vehicle tax credit for a little while, but then what?
By Kelley R. Taylor • Published
-
When Are Taxes Due in 2023? Tax Deadlines by Month
tax deadline Know the tax deadlines that apply to you, so you don't get hit with IRS penalties or miss out on a valuable tax break.
By Rocky Mengle • Published
-
State "Stimulus Checks" in 2023 – Which States Are Still Sending Payments
Residents in a handful of states could still receive a tax rebate check or other payment in 2023.
By Rocky Mengle • Last updated
-
What's the Gift Tax Exclusion for 2023?
Plan on giving cash or property to family or friends? Keeping it below the annual gift tax exemption can help you save both time and money.
By Rocky Mengle • Published
-
Top Tax Stories of 2022 (That Still Matter for 2023)
Kiplinger highlights some of its top tax stories of 2022 about topics that can still impact your finances in 2023.
By Kelley R. Taylor • Published
-
How "Stealth Tax Hikes" Can Cost You Money Each Year
A 2018 change in the way tax items are adjusted for inflation leads to less tax decreases over time. And some tax items aren't adjusted for inflation at all.
By Joy Taylor • Published
-
Retirement Saver's Tax Credit Converted to "Saver's Match"
President Biden has signed legislation that turns the Saver's Credit into a government match to your retirement plan contributions.
By Rocky Mengle • Published