The Democratic Party of the United States proposes in Congress to raise tax rates for “people with high income.” The tax hike will also affect cryptocurrency holders.
The Democratic wing of the House of Representatives of the US Congress has proposed tax initiatives to find additional sources of revenue for the budget. The funds received will be used to finance a package of government spending in the amount of $ 3.5 trillion.
If the Democrats’ initiative is approved, it is planned to increase the income tax rate, capital gains tax and net investment capital for “certain high-income individuals”, which will also affect the income of owners of crypto assets.
According to a document released by a House Committee, the proposal includes an increase in the tax rate on long-term capital gains from the current 20% to 25% and an additional tax of 3.8% on net investment income. Thus, the tax rate on capital gains and dividends in the United States, including owners of digital assets, could reach 28.8%.
The new rate structure also provides for a progressive income tax rate: 18% up to $ 400,000; 21% on income up to $ 5 million and a 26.5% rate on income over that amount.
In addition, the tax plan will extend the application of the wash-out rule to cryptocurrencies in a manner similar to traditional financial instruments, as existing tax laws treat digital assets as property. The Democratic proposal will eliminate the opportunity for cryptocurrency owners to maximize tax deductions by selling a losing financial asset at the end of a calendar year in order to notify the IRS of a loss of capital in the current year.
The Democratic House of Representatives tax plan follows the passage of the Senate Infrastructure Act, which introduced stricter reporting requirements for cryptocurrency companies and brokers.
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