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According to an analysis released Wednesday by the Urban-Brookings Tax Policy Center, federal taxes at the top percentile would rise an average of more than $ 213,000 over the next year due to President Joe Biden’s tax plan.
Those households earning about $ 800,000 or more a year would see their after-tax income drop 11%, according to the report.
Biden suggested raising taxes for wealthy Americans and businesses to pay for a multi-pronged infrastructure plan and an expansion of the social safety net that would particularly benefit low- and middle-income families.
The top 0.1% – who make at least $ 3.6 million – would pay an additional $ 1.6 million on average. Your after-tax income would decrease by about 17%, according to the Tax Policy Center.
Biden’s plan would raise the upper marginal income tax rate from its current 37% to 39.6%. It would also tax the increase in the value of unsold stocks and other assets upon death, rather than transferring those assets to many heirs tax-free.
The top tax rate on long-term capital gains would increase from 23.8% now to 43.4% combined for taxpayers with annual income greater than $ 1 million.
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The plan would also extend recent temporary increases to child tax withholding, child and care credit, and earned income tax withholding introduced by the American Rescue Plan. These benefits would mainly go to households with low and middle incomes.
The Biden plan would give low-income households (earning $ 26,000 or less) an average tax cut of $ 600 over the next year – which would increase their after-tax income by about 4%, according to the Tax Policy Center.
Medium-wage earners (who earn between $ 52,000 and $ 92,000) would receive an average of $ 300 in tax cut, or 0.5% of after-tax income, according to analysis.
However, families with children would receive greater tax breaks. For example, low-income earners with children would increase their tax cut by more than five times to an average of $ 3,200.