Biden's proposed 39.6% top tax rate would hit these individuals, families
The new tax rate would start to apply during the 2022 tax year
Biden $6T budget to detail projected spending, taxes in next 10 years
Former acting White House chief of staff Mick Mulvaney on what to expect from Biden’s proposed $6 trillion budget that Democrats claim will ‘reshape America.’
President Biden introduced a sweeping spending plan earlier this year financed in part by raising taxes on the top sliver of U.S. households, including raising the top individual income rate to 39.6%.
That new top rate – which reverses part of the Trump-era Tax Cuts and Jobs Act – would apply to single individuals with taxable income of more than $452,700 and married couples with joint taxable income of $509,300, according to the president's $6 trillion budget proposal released last week.
Heads of households earning more than $481,000 and married individuals filing separate tax returns with income over $254,650 would also pay the higher rate.
BIDEN TAX PLAN CALCULATOR: HOW MUCH WOULD YOU PAY UNDER THE NEW PROPOSALS?
The current top marginal rate of 37% is currently paid by singles earning $523,601 or more and couples making $628,301 or more.
Assuming the proposal becomes law – which hinges on a deeply divided Congress – the new tax rate would start to apply during the 2022 tax year.
Still, the proposed brackets seemingly contradict Biden's campaign promise that no one earning less than $400,000 would pay higher taxes if he were elected. For instance, 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.
"Anybody making more than $400,000 will see a small to a significant tax increase," Biden told ABC News in mid-March. "If you make less than $400,000, you won't see one single penny in additional federal tax."
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The White House has repeatedly given inconsistent responses when asked whether the $400,000 threshold applies to individuals or married couples and households.
"People file as married couples, they file as individuals, and his promise to the American people is that people who are in the 99% of people who are making less than that are not going to have their taxes go up," White House press secretary Jen Psaki said on CNN on Thursday. Asked whether the threshold for families will also be $400,000, she said: "That’s right, and individuals."
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.
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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.