H.R. 2908, the Middle Class Savings Act, adjusts the income thresholds that determine which tax bracket applies to capital gains (profits from selling investments). Currently, capital gains brackets use different cutoff amounts than regular income brackets, which can result in higher tax rates on investment income. This bill aligns the capital gains brackets with the standard income tax brackets by raising the thresholds—for example, increasing the top threshold for the preferential capital gains rate from $425,800 to $591,600 for certain filers. The changes would primarily benefit middle and upper-middle-class investors by allowing them to keep more investment gains in lower tax brackets. The bill takes effect for tax years beginning after December 31, 2024, and requires no new funding.
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