House Democrats propose top 39.6% tax rate at these income levels

Wealth

Drew Angerer | Getty Images News | Getty Images

House Democrats have proposed a top marginal income tax rate of 39.6% for individuals, part of a sweeping change to the tax code to fund climate investments and an expansion of the U.S. safety net.

That rate, an increase from the current 37% levy for the wealthiest taxpayers, would kick in for single individuals with taxable income over $400,000, according to a legislative outline issued by the House Ways and Means Committee on Monday.

It would also apply to married individuals filing a joint tax return whose taxable income exceeds $450,000; to heads of households over $425,000; to married individuals filing separate returns over $225,000; and to estates and trusts over $12,500.

More from Personal Finance:
House Democrats propose new retirement plan rules for the rich
House Democrats’ plan drops repeal of a tax provision for inheritances
House Democrats propose raising capital gains tax to 28.8%

If the plan became law, the changes would start in 2022. They would raise $170 billion over the next decade, according to a Joint Committee on Taxation estimate issued Monday.

The current top 37% rate kicks in at higher income thresholds than the ones House Democrats have now proposed. In 2021, they apply to single filers and heads of household when income exceeds $523,600 and for married joint filers over $628,300, for example.

The Biden administration has also called for a top 39.6% tax rate. The top rate would increase to that level in 2026, even if Democrats are unsuccessful in their attempts to raise it in the short term, due to provisions in the 2017 Tax Cuts and Jobs Act.

The proposal is among several others House Democrats aim at taxpayers earning more than $400,000 a year, including higher taxes on long-term capital gains and qualified dividends and changes to how the wealthy use retirement accounts.

Changes to individual and corporate tax rules would raise more than $2 trillion over the next decade, according to the Joint Committee on Taxation.

Products You May Like

Articles You May Like

Long-term care needs among retirees varies widely, new research shows
Women are still behind men when it comes to retirement savings. What they can do to build security
Here’s how inflation is hitting the online prices of everything from apparel to furniture
Two-thirds of wealthy business owners plan to sell or retire sooner due to Covid pandemic, survey finds
Stocks making the biggest moves midday: Oracle, General Electric, Southwest Airlines and more

Leave a Reply

Your email address will not be published. Required fields are marked *