President Biden’s FY 2025 Budget Tax Proposals

Contained below are relevant provisions from President Biden’s tax proposal. The proposals are not legislation, and each proposal will need to be introduced and passed by Congress.

Individual Taxation Proposals

• Raise the top individual income tax rate to 39.6% for incomes over $400,000 for single filers and $450,000 for joint filers.
• Increase the Net Investment Income Tax (NIIT) rate from 3.8% to 5% for incomes exceeding $400,000, and expand the NIIT to cover active pass-through income.
• Tax long-term capital gains and dividends as ordinary income for incomes above $1 million. Implement a new 25% minimum tax on billionaires, which includes unrealized capital gains.
• Introduce new rules for high-income taxpayers using retirement accounts, limiting contributions for those with large balances.
• Close loopholes related to estate and gift taxes, which will affect certain trust arrangements.
• Expand the Child Tax Credit and Earned Income Tax Credit permanently, as introduced by the American Rescue Plan.
• Extend tax credits for low-income housing and introduce the Neighborhood Homes Credit for affordable housing in distressed areas.
• Continue the expanded eligibility for healthcare premium tax credits beyond 2025.

Cryptocurrency Reporting

• Apply securities loan rules to digital assets.
• Extend the application of mark-to-market regulations to include dealers and traders of digital assets.
• Require information reporting for digital asset transactions.

Real Estate and Investments

• Limit like-kind exchanges in real estate to gains of $500,000 ($1 million for married couples filing jointly).
• Propose a 4% tax on corporate stock buybacks, increased from the current 1%.

Partnership Taxation

• Prevent basis shifting by related partners.
• Include 3.8% Medicare tax and self-employment tax in the centralized partnership regime.

Private Foundation Taxation

• Include 3.8% Medicare tax and self-employment tax in the centralized partnership regime.

Corporate Tax

• Proposed increase of the corporate income tax rate from 21% to 28%. 

International Taxation

• Provide a 10% tax credit for expenses incurred in “onshoring” and deny deductions for “offshoring” a U.S. trade or business.