Democrats in the US House of Representatives have proposed tax initiatives in order to fund a $3.5 trillion spending package that may actually affect crypto users.
This proposal wants to increase the tax rate on long-term capital gains to 25% from the current 20% for “certain high-income individuals.”
An additional tax of 3.8% on net investment income is also planned to be applied, which would raise the tax rate to 28.8% for wealthy crypto users.
Furthermore, the tax plan wants to add digital assets to the “wash sale” rules which stop investors from claiming capital gains deductions on certain assets that are bought back in 30 days since the sale, “previously applicable to stock and other securities.”
The current tax laws under the IRS see crypto as being property in wash sales, but the new proposal would solve this problem.
If the proposal becomes law, crypto users will need to report taxes according to the new wash sale rules beginning with December 31st and the capital gains tax rate would start being used for transactions this month.