The 10-year initiative, dubbed the American Families Plan, seeks to dramatically boost federal investment in education, child care and paid family leave. It would be funded by raising the individual income tax rate to 39.6% – where it sat before Republicans' 2017 tax overhaul – for families with joint taxable income of about $509,300 and individuals earning more than $452,700.
Under those proposed brackets, a hypothetical couple that earns $600,000 combined each year would be required to pay the higher taxes, even if the spouses individually made less than $400,000. This would apply if the couple filed jointly.
The current top marginal rate of 37% is currently paid by singles earning $523,601 or more and couples making $628,301 or more.
The president has also proposed increasing the capital gains rate to 39.6% from 20% for households earning $1 million or more, bringing that rate in line with the top marginal income tax rate. Coupled with an existing Medicare surcharge, federal tax rates for the wealthy could climb as high as 43.4% – bringing the levy on returns on financial assets higher than rates on ordinary income.
The administration estimates it will affect roughly 0.3% of taxpayers, or about 500,000 households.
"No one making $400,000 per year or less will see their taxes go up," the White House said.
You can use this free calculator from Omni to see how much money you can expect to pay under the president's newest tax plan.
The top 1% of U.S households would owe an average of $260,000 more per year in taxes under the proposal, according to an analysis by the Urban Institute's Tax Policy Center.
Revenue generated by the tax increases would be used to pay for Biden's sweeping spending plan that seeks to dramatically boost federal investment in education, child care and paid family leave. Billed by the White House as a "once-in-a-generation investment" in the nation's future, the plan includes $1 trillion in spending over the next decade, as well as $800 billion in tax credits for the middle class.
Some Americans can also expect to receive a bigger tax refund if Biden's plan becomes law. The American Families Plan would extend through 2025 an expanded version of the child tax credit that Democrats passed earlier this year with the American Rescue Plan.
The enhanced credit provides low- and middle-income parents with up to $3,000 for every child ages 6 to 17 and $3,600 for every child under age 6. The expanded amounts are tapered off once income hits $75,000 for individuals and $150,000 for married couples. If families earn too much to qualify for the sweetened tax credits, they can still receive the $2,000 credit for their children if their income level is below $200,000 for individuals and $400,000 for married couples.
For instance, a family with a 10-year-old and a 4-year-old would be eligible for a credit of $6,600 if they earn less than $150,000.