Capital Gain Taxes: How They Will Affect You
As the 2024 election approaches, both Donald Trump and Kamala Harris have proposed significant changes to capital gains taxes, which could impact investors and high-income earners. Here’s what you need to know about each candidate’s plans and how they may affect your financial situation.
1. Donald Trump’s Plan for Capital Gains Taxes
Donald Trump aims to continue promoting tax cuts for individuals and businesses. One of his key proposals is to reduce the long-term capital gains tax rate for high-income earners. Currently, the maximum capital gains tax rate is 20% (or 23.8% when including the net investment income tax). Trump’s proposal could bring this rate down, making it more favorable for investors to sell assets such as stocks or real estate at a lower tax cost. Additionally, Trump has suggested expanding certain tax benefits for businesses, which could indirectly benefit those with significant investments.
For more information on Trump’s broader tax policies, you can visit Kiplinger’s Trump Tax Plans Overview.
2. Kamala Harris’s Capital Gains Tax Proposal
Kamala Harris, on the other hand, has proposed an increase in capital gains taxes for wealthy Americans. Under her plan, the top capital gains tax rate would rise to 28% for individuals earning more than $1 million. This proposal represents a softening from President Joe Biden’s initial push for a 39.6% rate on capital gains, but it still marks a significant increase from the current rates.
Additionally, Harris has shown support for taxing unrealized capital gains, which means that wealthy individuals could face taxes on their investments even if they haven’t sold or realized those gains yet. This measure is aimed at reducing income inequality and ensuring that the richest Americans contribute more to federal revenues. However, such a plan could face legal challenges and resistance from investors.
To learn more about Harris’s tax proposals, check out the full details at Kiplinger’s Harris Tax Overview.
What It Means for You
- If you are a high-income investor: Under Trump, you may see lower capital gains taxes, making it a more favorable environment for selling long-term investments. Under Harris, expect higher taxes on your investment gains, especially if your income exceeds $1 million.
- If you are a middle-class investor: While neither plan significantly affects lower-income or middle-income earners directly, Harris’s proposal includes provisions to ensure that those earning under $400,000 would not see tax increases. Meanwhile, Trump’s plan could provide a slight advantage through other tax cuts on business and investment income.
Both plans reflect the stark differences in economic philosophy between the two candidates, with Trump pushing for continued tax cuts and Harris advocating for a more progressive tax system aimed at closing the wealth gap.
For specific advice on how these changes might affect your personal finances or investments, it’s recommended to consult with a tax professional like those at USA Tax Solutions.
