Biden’s proposed top tax rate of 39.6% would apply to these income levels
Tasos Katopodis | Bloomberg | Getty Images
(For comparison, the highest individual rate of 37% applies to incomes exceeding: $ 523,600 for single filers and heads of household, $ 628,300 for married spouses and $ 314,150 for filers. separated married.)
The maximum rate of 39.6% would take effect in tax year 2022, according to the proposal. (This means that this would apply to tax returns filed in 2023). Congress is yet to pass legislation adopting the policy, which is not guaranteed.
Biden’s proposal is one of many measures to raise taxes on households earning more than $ 400,000 a year.
Tax revenues would help fund initiatives under the American plan for families expanding the social safety net, including funding for four more years of free schooling, heavily subsidized child care for middle-class families, federally paid family leave and tax credits for extended children.
Raising the maximum rate to 39.6% would raise around $ 132 billion over five years, according to at the Treasury Department.
The top rate is expected to rise even if Congress does not pass Biden’s proposal. The individual tax cuts in the Tax Cuts and Jobs Act will expire after 2025 because of how Congress has structured the law.
The income thresholds proposed by Biden for the 39.6% rate correspond to pre-TCJA thresholds, indexed to inflation, according to a Treasury official.