2025 Shockwave: Biden Proposes Doubling Capital Gains Tax

31 May 2024 · 2 min

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2:09

Short YouTube commentary (Donna Genie of calculatedmoves.com) warning investors about a 2025 budget proposal from President Biden to raise the long-term capital gains tax rate from 20% to 39.6%. The speaker defines a capital gain, gives a numeric example (a $100,000 gain taxed at 20% vs. 39.6%) to show the potential increase in tax liability, and advises viewers to consider timing sales and watch political developments leading into the 2024 election.

Questions this video answers

20%

39.6%

Current (20%): $20,000; Proposed (39.6%): $39,600

Chapters

Could your investment returns be slashed in half next year? Well, there's a new proposal out and I want to tell you some more about it. I'm Donna Bordeaux with calculatedmoves.com generally we're not talking about tax law changes until right up against the end of the year. So it's a little early and it's political season. With the election coming about here in 2024, there are lots of things flying around. But President Biden has released his 2025 fiscal year projections and his budget ideas. And one of his proposals is to change the capital gains rate from 20% to 39.6%. Yes, nearly doubling how much tax you would pay on a capital gain. What is a capital gain? A capital gain is profit that you make when you're selling an investment that could be anything from stocks to homes, like rental homes or investment properties, land, anything like that. That is going to be a capital gain. So if you sold a and made a profit of $100,000 selling a piece of land, for example, the federal income tax on that would be 20%. As long as you've held it for a year or longer. Under these new proposed regulations, your tax bill would go from $20,000 to to $39,600. That's a whopper of an increase. Keep your eye on this. And if you have ideas about potentially selling something this year versus next year, don't wait too long before you decide and look at the tax consequences because you'll have to sell that investment for much more next year if that tax rate does go through. Now, I'm not one to look at proposed changes too seriously, but I do think we need to keep our eye on this because if that passes and Democrat stays in the House or Joe Biden is re elected, that is probably a proposal that may go forward. So keep your eye out and I'll keep an eye out for you and let you know the latest and greatest as I hear it.