WASHINGTON—President Biden’s budget assumes that his proposed capital-gains tax rate increase took effect in late April, meaning that it would already be too late for high-income investors to realize gains at the lower tax rates if Congress agrees, according to two people familiar with the proposal.
Mr. Biden’s plan would raise the top tax rate on capital gains to 43.4% from 23.8% for households with income over $1 million. He would also change the tax rules for unrealized capital gains held until death.
The effective date for the capital-gains tax rate increase would be tied to Mr. Biden’s announcement of the tax increase as part of the American Families Plan, which includes an expanded child tax credit and funding for preschool and community college. He detailed the plan April 28, and the budget will be released Friday. White House spokespeople didn’t immediately comment.
Congress must still approve any rate changes and retroactive effective dates, and there is already reluctance building among some congressional Democrats.
Write to Richard Rubin at richard.rubin@wsj.com
