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Under the Biden proposal the maximum capital gains are taxed would increase, from 20% to 25%. The new rate would be effective for sales that occur on or after Sept. 13, 2021. But do the proposals change the rates for all brackets? For example, does the 15% rate change under the proposals?

Current: Married Filing Joint 0% $0 to $80,000 15% $80,001 to $496,600 20% $496,601 or more

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    I’m voting to close this question because this is about proposed legislation, there can still be many compromises and changes before it is passed. Oct 16 '21 at 11:34
  • From what I've read, the increase would only affect those making more than a million dollars per year. And at this point, it's a moot point because these are just proposals of which each branch of our government has one and proposals are merely negotiating points until the three branches hash out their differences. Oct 16 '21 at 11:42
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It is not moot if you will have to pay the taxes retroactively and need to plan accordingly. These tax changes have an effective date as the date in which the legislation is introduced not passed. So if passed the changes have retroactive implications to anyone thinking of selling stocks now. The good news is that upon reading the proposed legislation I am confident that it does not apply to the existing 15% bracket which would impact a lot of people.

The new rate would apply to stock and other asset sales that occur after Sept. 13, 2021, the date House Democrats introduced the tax portions of their legislation.

Sec. 138202. Increase in Capital Gains Rate for Certain High Income Individuals The provision increases the capital gains rate in section 1(h)(1)(D) to 25%. The amendments made by this section apply to taxable years ending after the date of introduction of this Act. A transition rule provides that the preexisting statutory rate of 20% continues to apply to gains and losses for the portion of the taxable year prior to the date of introduction. Gains recognized later in the same taxable year that arise from transactions entered into before the date of introduction pursuant to a written binding contract are treated as occurring prior to the date of introduction

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  • Despite passing in the House, having to pay the taxes retroactively is just a proposal and in order to take effect, it must pass in the Senate. That means that the two Democrats that oppose the legislation and want concessions must be brought on board. So at this point, it's all moot. Oct 16 '21 at 19:03
  • I agree with the general thrust of your point and appreciate your comments. For me, it is all moot since I am not affected. Technically, though, I do not consider something as moot if it is relevant to one's decision making. For those affected, the possibility of passage/amendment is relevant to decisions made now prior to passage. Such decision making must weigh one's estimated probability of passage against other relevant factors. If the 15% rate increased to 25% I may gamble on selling now hoping the dates got moved forward weighed against the tax implications of realizing capital gains.
    – joemooney
    Oct 16 '21 at 19:38
  • Yes, if the proposed legislation is going to adversely affect you then you should be evaluating the "what ifs" in order to determine the best path forward. Oct 17 '21 at 12:05

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