Long-term capital gains are generally taxed at a maximum rate of 20% plus the 3.8% net investment income tax (NIIT). One Biden administration proposal would replace these rates with ordinary income rates for taxpayers earning more than $1,000,000. This could cause higher earners to pay as much as 39.6% plus the 3.8% NIIT.
From a QSBS perspective, these increased taxes could make QSBS more appealing for the high earner group, provided the gains on QSBS (acquired after September 27, 2010) continue to remain excluded from capital gains taxes for all taxpayers.
Let us know your thoughts on how Biden administration policies may impact QSBS.
This article does not constitute legal or tax advice. Please consult with your legal or tax advisor with respect to your particular circumstance.
