Biden Administration Proposes New Tax Reforms
May 17, 2023|
By: Raksha Rathod
The Biden administration has proposed a number of significant tax reforms that could have far-reaching implications for individuals and businesses across the country.
Individual Tax Reforms
- Raising the top individual income tax rate: The proposal would increase the top individual income tax rate from 37% to 39.6% for individuals earning more than $400,000 per year for couples earning more than $450,000 per year.
- Capital gains tax increase: The proposal would increase the capital gains tax rate for individuals earning more than $1 million per year ($500,000 for married individuals filing separately) from the current 20% to 39.6%, which is the same rate as the top individual income tax rate.
- Minimum Tax for High-Net-worth individuals: The proposal would charge minimum tax of 25% for High Net worth individuals having net worth exceeding $100 million.
Business Tax Reforms:
- Increasing the corporate tax rate: The proposal would increase the corporate tax rate from 21% to 28%.
- Increased IRS enforcement: The proposal would provide additional funding for the IRS to increase enforcement efforts and crack down on tax evasion and noncompliance.
- Elimination of step-up in basis: The proposal would eliminate the step-up in basis for capital gains at death, which means that heirs would inherit assets at their current market value, rather than the value at which they were originally purchased. This could result in increased taxes on capital gains for heirs.
These proposals have generated significant discussion and debate, as they would have significant implications for taxpayers across the country. Supporters argue that the proposed reforms would help to reduce income inequality and fund important social programs, while opponents argue that they could stifle economic growth and discourage investment.
It remains to be seen whether these proposals will be passed into law and in what form they will ultimately take. The hard-working and dependable accounting team at Chugh, LLP will continue to monitor developments and keep you informed of any updates that may be relevant to your tax planning and financial situation. For help understanding the new proposal or other tax planning inquiries, contact your trusted accountant.
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