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TaxBuzz Top 5 - Biden Proposes Capital Gains Increase, White House Bans Noncompetes & More

TaxBuzz Top 5 - Biden Proposes Capital Gains Increase, White House Bans Noncompetes & More

Each Friday, TaxBuzz brings you the top five tax and accounting headlines you need to know from the workweek. We know life can get busy and you don't always have time to scroll through your news feed to stay informed.

We weed through all of the week's stories to showcase the most important updates in the tax and accounting world.

1. Biden Proposes Capital Gains Increase to 44.6%

Credit: Joseph Sohm, Visions of America/Getty Images

President Joe Biden’s FY 2025 Budget proposal includes a headline-grabbing potential capital gains rate increase to 44.6%, sparking widespread debate. Forbes notes, however, that the proposed hike consists of multiple components, including raising the top ordinary rate to 39.6% and increasing the net investment income tax. Notably, the 44.6% rate would apply only to individuals with taxable income exceeding $1 million and investment income above $400,000.

This proposal was crafted as part of a broader strategy to address concerns about American income inequality and ensure high earners contribute proportionately. While the proposal may seem dramatic, it's a calculated move aimed at rebalancing tax burdens without unduly burdening small-business owners. Ultimately, it signals a shift towards fairer taxation, particularly for America’s wealthiest individuals, who currently benefit from disproportionately low tax rates.

2. White House Places Nationwide Ban on Noncompete Agreements

The Biden administration's newly-instated nationwide ban on noncompete agreements has sparked both praise and pushback. FTC Chair Lina M. Khan applauded the ruling, stating, “Noncompete clauses keep wages low, suppress new ideas, and rob the American economy of dynamism.”

Labor groups like the AFL-CIO and progressive experts also hailed the move, noting its potential to empower workers and boost competition. However, NBC News shared that business organizations, including the U.S. Chamber of Commerce, are gearing up for legal battles, arguing that noncompetes can safeguard trade secrets and foster collaboration.

Despite the anticipated legal challenges, the new rule is currently slated to take effect in August.

3. Texas Hosting Emergency Preparedness Tax-Free Weekend

Credit: P.A. Thompson/Getty Images

Texans are gearing up for the 2024 Emergency Preparation Supplies Sales Tax Holiday, starting Saturday, April 27 at midnight and running through 11:59 pm on Monday, April 29. During this tax-free weekend, residents can purchase essential items like portable generators, emergency ladders, batteries, and more to prepare for disasters.

However, some items like medical masks and cleaning supplies are not included. A full list can be found here.

Whether shopping in-store or online, remember that delivery charges count toward the total sales price. If you accidentally pay sales tax, don't worry—ask the seller for a refund or file a claim with the Texas Comptroller's office for reimbursement by calling 800-531-5441, ext. 34545.

4. Colorado Lawmakers Review Property Tax Proposal at 11th Hour

Colorado state lawmakers are set to review an 83-page property tax relief bill with just two weeks left in their current legislative session. Proposed after months of hearings by a bipartisan Commission on Property Tax, the bill aims to offer relief for homeowners while preserving local government services.

CBS News shared that lead sponsor, Senator Chris Hansen (D), is focused on a key provision that would allow residents to exempt up to $75,000 or 10% of their home's value from taxation, potentially offering nearly $800 million in tax relief. Critics have already expressed concerns about the bill's flexibility, arguing it grants lawmakers the power to adjust relief measures without voter approval.

The bill also addresses education funding protection, backfilling for special districts, and commercial assessment rate reduction over five years. As the legislative session nears its end, attention turns to the bill's potential impact and the source of backfill funding, with TABOR (Taxpayer Bill of Rights) refunds a possible point of contention.

5. Tennessee Lawmakers Give Businesses Second Tax Break in Two Years

Credit: Halfpoint Images/Getty Images

Tennessee lawmakers have approved a measure to eliminate a portion of the state’s business tax, with estimates suggesting it could cost the state $7.4 billion in the future. The move follows a bipartisan Commission on Property Tax and aims to offer relief for homeowners while preserving local government services. Despite having one of the lowest tax burdens in the U.S., Tennessee's tax system has been criticized for disproportionately affecting low-income families.

The latest tax break -- the second business tax break in two years, per Tennessee Lookout -- eliminates the state’s property portion of the franchise tax and includes refunds for past payments. However, concerns about transparency linger, with Senate Republicans opposing full disclosure of refund recipients. Governor Bill Lee's involvement raises questions about potential conflicts of interest, while Democrats have criticized the cuts, proposing alternative measures to fund essential services.

Which headline this week most interests you?

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Rebekah Barton

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