An increase in income tax rate means you'll pay a higher percentage of your income to the government. This directly reduces your disposable income, the money you have left after taxes for spending or saving. This can make it harder to afford basic necessities, save for retirement, or invest in your future.
The White House released its fiscal year (FY) 2025 budget request to Congress. Overall, it proposes $7.3 trillion in total spending, including a proposed $895 billion for defense and approximately $621 billion in non-defense base discretionary spending. The request is the fourth and final budget proposal that Biden will issue before the end of his term. Similar to last week’s State of the Union address, the budget request highlights the policy priorities that will continue to be central to the president’s reelection campaign.
As expected, the budget offers a range of proposals to increase taxes on businesses and high-income individuals. In recent weeks, Biden frequently reiterated his promise that the budget proposal will not raise taxes on individuals with annual incomes below $400,000. Many of the tax provisions in the FY 2025 budget are the same or similar to proposals included in previous Biden administration budgets or early versions of the Build Back Better package. These proposals have thus far failed to attract sufficient support from Congress, but they may be reconsidered next year, depending on the result of the upcoming elections. Below are the corresponding documents for the FY 2025 budget:
- FY 2025 Budget Proposal. The budget proposal and corresponding revenue tables.
- Budget Fact Sheet. Top-line summary of various proposals in the budget.
- Tax Fact Sheet. Summary of the tax proposals in the budget.
- Budget Appendix & Analytical Perspectives. Additional budget estimates and economic data.
Separately, the Treasury Department released its General Explanations of the Administration’s Fiscal Year 2025 Revenue Proposals, also known as the “Green Book,” today. This document provides cost estimates and more-detailed descriptions of the tax proposals in the budget.
The Brownstein Tax Policy Team is preparing an analysis of the tax provisions included in the administration’s FY 2025 budget, which will be published in the coming days. In the meantime, below are a few high-level takeaways concerning the tax-related proposals.
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