How Biden’s tax plan would impact states across the U.S.

Yahoo Finance's Denitsa Tsekova breaks down the states most affected of President Biden’s tax proposals.

Video transcript

ALEXIS CHRISTOFOROUS: President Biden we know is planning to raise revenue to fund his infrastructure plans through numerous tax hikes. So that would mostly hit America's wealthiest. But which residents in which states will be hurt the most? Yahoo Finance's Denitsa Tsekova did a little homework. And she's here now to fill us in. What did you find, Denitsa?

DENITSA TSEKOVA: Well, yeah, Alexis, as we know, this plan will only hit the top 1%. And this specific analysis finds that only the 0.7% of American taxpayers will see a tax increase if this plan is implemented. And more specifically, those people will see around $160,000 of a tax increase-- this is per year-- if the plan is implemented in 2022. The proposal-- the main two things of the proposal is, obviously, to increase the capital gains rate and then the top income tax rate. The good news is that the bottom 95% of taxpayers will see no change in their tax bill if the tax plan is implemented in 2022.

And now the state breakdown is New Jersey, Massachusetts, New York, and California, which maybe you guess will see one of the highest burdens when it comes to tax increases. They will shoulder that tax burden. Those states will see above 1% of their state population seeing a tax increase if this plan is implemented. Still, it's important to say that 1% is relatively low. And the majority of the population of those states really won't see a different tax bill in 2022.

And then, on the other end of the spectrum, we have Arkansas, Louisiana, Mississippi, New Mexico. All these states will see a very small tax increase and a very small fraction of their population seeing a different tax bill if Biden's plan is implemented. So only 0.3% or fewer people in those states will face the potential tax hike, which, of course, great news for the residents in those places.

And the two main proposals, of course, are increasing the top individual income rate to 39.6%. This is only for people who make above $400,000. And then the capital gains tax increase, which is the capital gains being increased to 39.6%.

ALEXIS CHRISTOFOROUS: All right, Denitsa Tsekova. Thanks so much for that. We appreciate--