US President Joe Biden’s upcoming budget proposal has a few surprises for cryptocurrency traders and investors, including a proposed doubling of capital gains for certain investors and a campaign against laundering cryptocurrency sales. .
The Biden administration is set to release its fiscal year 2024 budget plan on March 9, which reportedly aims to reduce the deficit by nearly $3 trillion over the next decade. It also includes changes to the treatment of crypto taxes with the goal of raising around $24 billion, according to reports.
One of these proposals includes ending a strategy in which a cryptocurrency trader sells assets at a loss for tax purposes, known as tax loss collection, before buying them back immediately afterward, according to the WSJ.
President Biden’s 2024 budget plan will seek to save hundreds of billions of dollars by lowering drug prices and raising some business taxes. https://t.co/oKDdy8h5cG
— The Wall Street Journal (@WSJ) March 8, 2023
Such a strategy is not allowed when it comes to stocks and bonds, under current wash sale rules. However, cryptocurrencies are currently not under these same rules, as digital assets have not been classified as securities.
However, it appears that the United States government is looking to change that.
Speaking to Cointelegraph, Danny Talwar of crypto tax software firm Koinly commented:
“This is an unavoidable consideration for the US which, if implemented, will see it on a par with other jurisdictions such as Canada and Australia where crypto-wash sales are enforced.”
“If the rule does apply, the timing is significant as many crypto holders who entered the crypto space on the back of the 2021 market peaks are suffering heavy losses,” he added.
Related: What is crypto tax loss collection and how does it work?
Biden’s budget also proposes to nearly double the capital gains tax rate for investors who earn at least $1 million to pay for 39.6% of long-term investments, up from the current tax rate of 20%. He also plans to increase income taxes on corporations and wealthy Americans, according to Bloomberg.
Biden proposes to double capital gains taxes from 20 to 40% and not allow tax loss collection on #bitcoin ….WTF… pic.twitter.com/SnJNglpoAA
—Lark Davis (@TheCryptoLark) March 9, 2023
Update Mar 9, 4:19 am UTC: Added clarification that the capital gains tax rate increase applies to a certain subset of investors, according to the Bloomberg report.
