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Biden Administration’s FY 2023 Budget Plan Calls for Tax Hikes for High-Net-Worth Individuals

Updated: Jul 20



Biden administration’s fiscal year 2023 budget blueprint, released on March 28, consists of a mix of familiar proposals and brand-new initiatives that reflect the President’s policy objectives. The proposals are described in more detail in the General Explanations of the Administration’s Fiscal Year 2023 Revenue Proposals, commonly referred to as the “Green Book,” that was released with the budget, and include the President’s now familiar calls for increasing the top corporate tax rate to 28% and the top individual rate to 39.6%.


The administration proposes to increase the top marginal individual income tax rate from 37% to 39.6%. For taxable year 2023, the rate would apply to taxable income over $450,000 for married individuals filing jointly ($225,000 for married individuals filing separately), $425,000 for head of household filers and $400,000 for single filers. The proposal would be effective for taxable years beginning after December 31, 2022. The proposal to increase the top marginal individual income rate merely accelerates the increase of the top individual tax rate to 39.6% that is currently scheduled to occur beginning in 2026, which is after most of the TCJA provisions are set to expire. However, this proposal also would lower the taxable income bracket subject to the top marginal income tax rate. As a result, the proposal would impose the top marginal tax rate on filers currently below the existing top marginal income tax rate of 37%. Thus, in 2022 the top marginal tax rate is 37% for joint filers with more than $647,850 of taxable income ($539,900 for single filers and heads of household, $323,925 for married filing separately). By comparison, the proposed 39.6% tax rate is proposed to be on taxable income over $450,000 for joint filers.


Call us to schedule a consultation to discuss your situation and uncover strategies to position yourself ahead of the tax curve.


Cobalt PacWest | CPAs & Advisors


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La Jolla, CA 92037


858-247-0939


npapagni@cobaltpacwestadvisors.com

www.cobaltpacwestadvisors.com


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