Proposed Changes to Capital Gains Tax Rates

The current top marginal tax rate for long-term capital gains is 23.8%, which consists of a 20% rate plus a 3.8% net investment income tax for high earners. Proposed changes suggest possible increases in these rates, with President Biden's budget plan recommending a rise to 39.6% for long-term gains, while Vice President Harris has proposed a more modest increase to 28%. Such changes could significantly impact taxpayers if they come to fruition, raising the total potential tax burden on high-income earners to 44.6% under Biden's proposal. Nevertheless, there remains uncertainty around the likelihood of these proposals being enacted, as political dynamics may lead to varied outcomes in tax legislation.