- Biden has proposed a top capital gains tax rate of 44.6%, the highest since the creation of the capital gains tax in 1922
- The combined federal-state capital gains tax rate would exceed 50% in many states, with California facing a rate of 59%
- Biden also wants to eliminate the step-up in basis on inherited assets, effectively imposing capital gains tax at death
President Biden has proposed raising the capital gains tax rate to 44.6% for 2025, the highest rate since the creation of the capital gains tax in 1922. This would impose significant tax burdens on investments and family businesses.
Biden Capital Gains Tax Rate Would Exceed 50% in Many States
When combined with state capital gains taxes, Biden’s proposed 44.6% federal rate would result in a combined capital gains tax rate exceeding 50% in several states:
- California: 59%
- New Jersey: 55.3%
- Oregon: 54.5%
- Minnesota: 54.4%
- New York: 53.4%
Higher Than China’s Capital Gains Tax Rate
China’s capital gains tax rate is 20%. Biden’s proposed rate of 44.6% would be more than double China‘s, putting the U.S. at a competitive disadvantage. With California’s additional state tax, residents there could face a rate nearly triple China’s.
Capital Gains Taxes Are Not Indexed for Inflation
Unlike regular income, capital gains are not adjusted for inflation. This means taxpayers may be forced to pay taxes on “gains” that are not actually gains when accounting for the effects of inflation. Biden’s high inflation makes this problem worse.
Capital Gains Taxes Are Double Taxation
For investments like stocks and stock funds, capital gains taxes represent double taxation on top of existing corporate taxes. Biden has also proposed hiking the corporate tax rate to 28%.
New Death Tax on Capital Gains at Death
Biden’s proposal would impose capital gains taxes at death by removing stepped-up basis. This amounts to a new federal death tax on capital gains in addition to existing estate taxes.
Massive Tax Hikes in Biden’s Budget
Altogether, Biden has proposed around $5 trillion in tax increases over the next decade. This capital gains tax hike is a major component.
