Individuals earning more than $452,700 and married couples earning more than $509,300 would see their marginal tax rate increase from 37% to 39.6% in 2022 under President Joe Biden’s proposed tax changes in the American Families Plan, a White House official confirmed to CNBC Make It Thursday.
Axios first reported the income thresholds for the tax bump earlier Thursday. Previously, Biden had said that only those in the top 1% would see an increase, but didn’t offer specific income thresholds.
The official says that this fulfills Biden’s promise not to raise taxes on individuals or families earning less than $400,000 a year. The president, though, had been vague up to this point on whether or not his pledge would apply to individuals or to couples as well. Under this plan, each partner could earn less than $400,000 but, collectively, see their tax bill increase.
Still, that would apply to less than 1% of U.S. households, according to the most recent filing data from the IRS.
The change would revert the top marginal rate back to its pre-2017 level, when it was lowered by former President Donald Trump’s tax law changes.
Biden introduced the $1.8 trillion plan American Families Plan Wednesday night during his first joint address to Congress. The plan calls for increased investments to expand access to child care and education.
Aside from increasing the top marginal income tax rate to 39.6% from 37%, it also calls for increasing long-term capital gains taxes for those earning over $1 million a year, among other tax changes.