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Yes, you read this correctly. Today, the White House is set to release President Biden’s fiscal ’22 budget, and there has been chatter that it may include information on proposed changes to the capital gains tax. The capital-gains tax rate increase could potentially take effect retroactively as of April 28th, 2021.
This is a major change and may not be the only retroactive change listed in the budget.
Back in April, President Biden released the American Families Plan showcasing some of the following changes:
- Top tax rate increased to 39.6% from 37%
- Capital gains tax rate to equate to 39.6%
- Elimination of step-up basis for gains over $1 million
- Potential removal of the unique real estate tax break—that allows real estate investors to defer taxation when they exchange property—for gains greater than $500,000
- Increase W-2 FICA taxes if you make over $400k
- Extend expanded A.C.A. premiums tax credits in the American Rescue Plan
- Extend the Child Tax Credit increases in the American Rescue Plan through 2025 and make the Child Tax Credit permanently fully refundable
- National comprehensive paid family and medical leave program
- Permanently increase tax credits to support families with child care needs.
- Make the Earned Income Tax Credit Expansion for childless workers permanent.
- Universal Preschool For three and 4-year-Olds
- Two years of free community college.
- Two years of Subsidized tuition, for specific fields.
There is quite a lot to unpack here and determine the best way to plan for these upcoming changes and whether or not it will be retroactive.
Do you want to walk through this together?
Are you interested in coming up with a game plan to cut your taxes this year? Let’s discuss more in a strategy session. Book Your Free Tax Assessment Here.