Capital Gains

Outside of one brief period, the United States has traditionally taxed long-term capital gains at a lower rate than ordinary income (wages, rent, and other compensation). Today, long-term capital gains are taxed at a top rate of 20%, but the rate rises to 23.8% if the income is subject to the 3.8% tax on net investment income. Currently, the net investment income tax applies to real estate gains earned by passive investors and not the income earned from the active conduct of professionals in real estate.


Congress should continue to encourage investment and job creation with a meaningful capital gains incentive.

Maintaining a reduced rate on capital gains decreases the cost of capital, drives long-term investment, encourages productive entrepreneurial activity, draws investment from around the world, and increases U.S. workforce productivity and competitiveness.

Steps should be taken to encourage and reward risk-taking and investment in communities where it is needed, not punish it.


President Biden’s budget proposals would raise the capital gains rate and expand the scope of the net investment income tax (NIIT) to include income earned by real estate professionals and other active business owners. The 3.8% NIIT would apply to capital gains, rental income, and pass-through business income generally.

The President’s budget also includes a proposal to tax built-in gain on an annual mark-to-market basis, regardless of whether an asset is sold.

For more information and recent updates, reference our resources below.


Capital Gains
Like-Kind Exchanges (LKEs)
Partnerships & Pass-Through Taxation
Carried Interest
Step-Up in Basis
Opportunity Zones (OZs)
Unrealized Gains ("Billionaire Tax")