At Extreme Investor Network, we strive to provide the latest and most valuable financial advice to help you make informed investment decisions. With the recent election of President Donald Trump, there has been much speculation about potential changes to individual taxes, including levies on investments.
One key proposal that has been put forth is Vice President Kamala Harris’s plan to increase long-term capital gains tax rates for top earners making more than $1 million annually. Under her proposal, the top rate would rise to 28% from the current 20%. This is a significant departure from President Joe Biden’s budget, which called for a 39.6% tax rate on long-term capital gains for the same top earners.
However, experts suggest that higher capital gains tax rates are unlikely under a Trump presidency and a Republican-controlled Congress. Erica York, a senior economist with the Tax Foundation, believes that with Republicans maintaining control of the Senate and potentially the House of Representatives, capital gains tax policy is likely to remain unchanged.
Currently, investors pay long-term capital gains rates of 0%, 15%, or 20%, depending on their taxable income. Assets owned for one year or less are subject to regular income taxes. It is important to calculate your taxable income by subtracting the greater of the standard or itemized deductions from your adjusted gross income.
In addition to potential changes in capital gains tax rates, higher earners may also be subject to the net investment income tax (NIIT), which is 3.8% on capital gains, interest, dividends, rents, and more. This tax applies once modified adjusted gross income exceeds certain thresholds, which are $200,000 for single filers and $250,000 for married couples filing jointly.
While there is speculation that Republicans may seek to eliminate the NIIT, experts caution that this could significantly impact the federal budget deficit, which already exceeded $1.8 trillion in fiscal 2024. It’s important to stay informed and consult with a financial advisor to understand how potential changes in tax policy may impact your investments.
For more expert financial advice and insights, be sure to visit Extreme Investor Network for the latest updates and strategies to help you navigate the ever-changing financial landscape.