- Wealthy families could face combined tax rates of as much as 61% on inherited wealth under President Joe Biden’s tax plan, according to a recent analysis.
- Biden’s plan proposes to nearly double the top tax rate on capital gains and eliminate a tax benefit on appreciated assets known as the “step-up in basis.”
- The combined tax rate would be the highest in nearly a century, according to the tax policy research group.
Wealthy families could face combined tax rates of as much as 61% on inherited wealth under President Joe Biden’s tax plan, according to a recent analysis and tax accountants.
As part of his American Families Plan, Biden is proposing to nearly double the top tax rate on capital gains and eliminate a tax benefit on appreciated assets known as the “step-up in basis.” Combining the estate tax, the new higher capital gains rate and the repeal of step-up in basis could bring total effective marginal rates as high as 61%, according to an analysis from the Tax Foundation.
“It’s a big number,” said Brad Sprong, KPMG partner and private enterprise tax leader. “That’s why we’re telling our clients to be smart and start preparing now.”
It’s unclear whether Biden’s plan can pass Congress, even with changes. Many moderate Democrats are likely to push back against his proposal to raise the capital gains rate to 39.6% as well as the plan to eliminate the step-up. What’s more, only a small number of the wealthiest taxpayers would ever face a rate of 61%. Many others would look to avoid it through tax and estate planning.
