President Biden has proposed raising the top individual income tax rate, but he has also pledged that no one making under $400,000 would see their taxes go up. Now, the White House is clarifying just who would be affected by Biden’s proposed tax hike.
Axios and Bloomberg News report that Biden’s proposed increase in the top tax rate from 37% to 39.6% would apply to individuals making more than $452,700 in 2022 and married couples with taxable income of at least $509,300, according to a White House official. That means the higher top tax rate would apply to less than 1% of taxpayers. Under the current tax brackets for 2021, the top marginal rate of 27% applies to individuals making $523,601 or more and couples earning $628,301 or more.
Why it matters: “The details mean the tipping point for an individual is even higher than the $400,000 previously laid out,” Bloomberg’s Josh Wingrove and Laura Davison write. But Axios notes that the new details mean that Biden's promise not to raise taxes on Americans making less than $400,000 only applies to individuals, and that “two married individuals, who each have a taxable income exceeding $255,000, would see the portion of their earnings above that figure taxed at the highest rate.”
That could add to the political challenges the president faces in getting his proposals enacted, Axios’s Hans Nichols suggests, “since some Democrats in high-income areas will have to explain to voters who individually might make less than $400,000 that their family could still be subject to Biden's tax hike.”