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.
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.”…Read more>>