United States House of Representatives members has suggested tax measures to support a $3.5 trillion spending package, which could have an impact on cryptocurrency users.
The proposal, according to a document released on Monday by the House Committee on Ways and Means, would raise the tax rate on long-term capital gains from 20% to 25% for “certain high-income persons.”
The proposed modifications would appear to be subject to a 3.8 percent surtax on net investment income, raising the capital gains and profits tax rate in the United States to 28.8 percent for rich crypto users.
Furthermore, the tax plan would include digital assets in the “wash sale” regulations, which ban investors from claiming capital gains deductions on certain assets repurchased within 30 days of a sale, “formerly applicable to stock and other securities,” according to the plan.
Existing IRS tax laws treat cryptocurrency as property in wash sales, a loophole that some crypto users have used to avoid capital gains, whereas the proposal from US senators would remove this gap.
If passed and signed into law, the bill would require crypto users to report taxes according to the new wash sale regulations beginning Dec. 31, while transactions done after Sept. 13 would be taxed at the capital gains rate.
The bill for the $3.5 trillion spending package, on the other hand, has not yet been finalized. The administration of President Joe Biden proposed boosting the capital gains tax rate for wealthy persons to 43.4 percent in April.
The House Democrats’ tax plan comes after the Senate passed an infrastructure bill that proposes tighter regulations for businesses dealing in cryptocurrencies and increased reporting requirements for brokers.
Many Democrats and Republicans have sought to change the bill’s language to explain the role of cryptocurrencies, and the House is set to vote on the measure on Sept. 27.
