- House Democrats have unveiled tax legislation that would raise the top marginal income tax rate to 39.6% from 37%.
- It would kick in for single filers with income over $400,000, heads of household over $425,000, married joint filers over $450,000, and married separate filers over $225,000.
- The changes would start in 2022 and are expected to raise about $170 billion over a decade.
House Democrats have proposed a top marginal income tax rate of 39.6% for individuals, part of a sweeping change to the tax code to fund climate investments and an expansion of the U.S. safety net.
That rate, an increase from the current 37% levy for the wealthiest taxpayers, would kick in for single individuals with taxable income over $400,000, according to a legislative outline issued by the House Ways and Means Committee on Monday.
It would also apply to married individuals filing a joint tax return whose taxable income exceeds $450,000; to heads of households over $425,000; to married individuals filing separate returns over $225,000; and to estates and trusts over $12,500.
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If the plan became law, the changes would start in 2022. They would raise $170 billion over the next decade, according to a Joint Committee on Taxation estimate issued Monday.
The current top 37% rate kicks in at higher income thresholds than the ones House Democrats have now proposed. In 2021, they apply to single filers and heads of household when income exceeds $523,600 and for married joint filers over $628,300, for example.
The Biden administration has also called for a top 39.6% tax rate. The top rate would increase to that level in 2026, even if Democrats are unsuccessful in their attempts to raise it in the short term, due to provisions in the 2017 Tax Cuts and Jobs Act.
The proposal is among several others House Democrats aim at taxpayers earning more than $400,000 a year, including higher taxes on long-term capital gains and qualified dividends and changes to how the wealthy use retirement accounts.
Changes to individual and corporate tax rules would raise more than $2 trillion over the next decade, according to the Joint Committee on Taxation.
Source: Business - cnbc.com
