HR 2908119th CongressIn Committee

Middle Class Savings Act

Introduced: Apr 14, 2025

Standard Summary

Comprehensive overview in 1-2 paragraphs

The Middle Class Savings Act would amend the Internal Revenue Code to leave capital gains brackets in place but require their thresholds to align with the current ordinary income tax bracket breakpoints. In practical terms, it raises several dollar thresholds that determine how long-term capital gains are taxed (0%, 15%, or 20%), so more of a taxpayer’s capital gains could fall into the lower brackets. The changes take effect for taxable years beginning after December 31, 2024. The bill’s name and text suggest a goal of easing taxes on middle-class savers and investors by updating capital gains treatment to reflect current ordinary income tax brackets.

Key Points

1The bill modifies §1(j)(5)(B) to raise key capital gains bracket thresholds, aligning them with current income tax bracket breakpoints.
2- Threshold changes include:
3- Clause (i)(I): from $77,200 to $103,350
4- Clause (i)(II): from $51,700 to $69,200
5- Clause (ii)(I): from $479,000 to $626,350
6- Clause (ii)(II): from $452,400 to $591,600
7- Clause (ii)(III): from $425,800 to $591,600
8Effective date: The amendments apply to taxable years beginning after December 31, 2024 (i.e., starting with 2025).
9Policy aim: By raising these thresholds to match ordinary-income brackets, more capital gains could be taxed at the lower rates (0% or 15%), which the bill frames as helping “middle class” savers.
10Administrative note: The change would require updates to tax tables, forms, and IRS guidance to implement the new bracket breakpoints.
11Scope: The amendment affects long-term capital gains bracket thresholds but does not alter the rates themselves or other related provisions (e.g., NIIT) beyond the bracket thresholds referenced.

Impact Areas

Primary group/area affected- Middle-class individuals and households with capital gains, including investors and savers who realize long-term gains. The higher thresholds could reduce federal taxes on their capital gains by pushing more gains into the lower-rate brackets.Secondary group/area affected- Higher-income filers who currently rely on capital gains thresholds at higher levels may see some gains taxed at lower rates if their income sits near the new thresholds; overall effect depends on each taxpayer’s mix of ordinary income and capital gains.Additional impacts- Revenue and budget: The bill would likely reduce federal revenue from capital gains taxes for many filers, particularly in the middle class, at least in the near term, though the text provides no explicit revenue estimate.- Compliance and administration: IRS would need new guidance and updated withholding/tax payment calculations to reflect the updated brackets.- Economic behavior: Investors might be incentivized to realize gains sooner or hold assets to manage which bracket their gains fall into, potentially affecting investment timing and asset allocation.

Generated by gpt-5-nano on Nov 18, 2025