Biden's Proposed Tax Changes for Wealthier Taxpayers

Minimum Tax on Billionaires and Near Elimination of Federal Estate Tax

In his recently released fiscal year 2025 budget proposal, President Biden has outlined several tax changes targeted at high-income earners and billionaires. These proposed changes include a minimum tax on billionaires, a reduction in the number of taxpayers subject to the federal estate tax, and an end to certain provisions of the 2017 Tax Cuts and Jobs Act (TCJA).

Minimum Tax on Billionaires

One of the most significant proposed changes is the implementation of a minimum tax on billionaires. Under this proposal, households worth more than $100 million would be required to pay a minimum effective tax rate of 20% on their total income, including unrealized gains on investments. This would ensure that billionaires contribute a fair share to the tax system.

Near Elimination of Federal Estate Tax

The budget proposal also proposes a near elimination of the federal estate tax by 2026. Currently, the estate tax only applies to estates valued at $12.92 million for individuals and $25.84 million for couples. The Biden administration's proposal would effectively eliminate the estate tax for all but the wealthiest families.

End to Certain TCJA Provisions

The budget proposal would also end certain provisions of the TCJA that have benefited high-income earners. Specifically, the proposal would eliminate the individual tax provisions of the TCJA, which include a reduction in the top marginal tax rate and an increase in the standard deduction. This would result in an increase in taxes for many taxpayers.

Impact on Long-Term Capital Gains Tax

The budget proposal would also increase the long-term capital gains tax rate for high-income earners. Under current law, long-term capital gains are taxed at a maximum rate of 20%. The Biden administration's proposal would increase this rate to 28% for taxpayers with taxable income over $516,300.

Conclusion

The tax changes proposed in President Biden's 2025 budget are significant and would have a far-reaching impact on high-income taxpayers. While these changes are designed to address income inequality and raise government revenue, their actual implementation and effectiveness will depend on the outcome of the ongoing legislative process.