By Josh Wingrove and Laura Davison
April 30, 2021, 11:50 a.m. EDT2 Min Read
President Biden’s proposed income tax increases for the wealthy would hit individuals earning more than $452,700 in 2022 and married couples making at least $509,300, according to a White House official.
The new top 39.6% tax bracket, proposed in Biden’s American Families Plan on Wednesday, would encompass less than 1% of taxpayers, the official said, asking not to be named to speak in more detail beyond the White House’s outline. The official’s comment suggested that the new rate, up from the current 37%, would be applied from 2022.
The Biden administration for weeks has said that no one making under $400,000 would see their taxes rise.
“People file as married couples, they file as individuals, and his promise to the American people is that people who are in the 99% of people who are making less than that are not going to have their taxes go up,” White House Press Secretary Jen Psaki said on CNN on Thursday.
The official’s comments are the most detailed yet on Biden’s income-tax proposal, after the administration for weeks said that no one making under $400,000 would see their taxes rise. The proposal still faces months of negotiations in Congress, where Democrats hold a razor-thin majority.
The details mean the tipping point for an individual is even higher than the $400,000 previously laid out. Psaki earlier Thursday, when asked if the $400,000 threshold applied to families, responded, “That’s right, and individuals,” and didn’t specify that some filers above that also wouldn’t see a hike.
For Biden’s separate proposed increase in the capital gains tax rate to 39.6% from 20%, the administration said earlier this week that will apply to both singles and joint filers who make $1 million or more.
The tax code has traditionally separated the income brackets for single and married filers to reflect the larger household size. Under current brackets, singles earning $523,601 and up or couples making $628,301 or more pay the top 37% marginal rate.
President Trump’s 2017 tax overhaul re-calibrated the tax brackets to lower levies for most filers at all income levels. The reshuffling also eliminated some long-standing problems for low and mid-income filers with what some call the marriage penalty — couples paying more in taxes when they file jointly than if they were to file as two single adults.
A marriage penalty still exists for top earners: those earning between roughly $628,300 and $1 million will likely pay more in taxes as a couple.
The White House official said that the thresholds revert the top tax bracket to what it would’ve been before the Trump tax cut.
Josh Wingrove And Laura Davison
Anil Vazirani is president of Secured Financial Solutions, independent insurance advisor investment advisor rep with a fiduciary obligation and in the financial services industry since 1994. A+ rating with the Better Business Bureau for over a decade and a half, members in good standing with the National Association of Insurance and Financial Advisors.
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