RISE Act Caps Capital Gains Tax Rate at 15% to Boost Investment

The “Revitalizing Investment, Savings, and Entrepreneurship Act,” or RISE Act, is kicking off with a big change to how investment profits are taxed. Specifically, Section 2 takes aim at the tax on “adjusted net capital gain,” setting a hard cap of 15% on the tax rate for certain high-level investment earnings. This change is effective for tax years beginning after the law is signed, meaning it’s a permanent shift in how the IRS looks at your long-term investment success.

The 15% Cap: What It Means for Your Portfolio

If you’re someone who holds investments—like stocks, mutual funds, or real estate—for more than a year before selling them for a profit, you realize a capital gain. This section of the RISE Act is designed to make those long-term gains more attractive by capping the tax rate at 15% for the highest tier of these profits. Right now, capital gains are taxed at different rates (0%, 15%, or 20%) depending on your total income. This bill ensures that once you reach the highest income bracket that triggers the 20% capital gains rate, the portion of your gain that exceeds the amount taxed at the lower tiers will not be taxed higher than 15%.

Think of it this way: the government is essentially saying, “We’ll take less of your biggest investment profits.” For a software developer who sold off a large chunk of company stock after a successful IPO, or a small business owner who sold their commercial property after 20 years, this could mean a significant difference in their tax bill. The goal, right there in the name, is to encourage people to keep their money in the market longer and invest more aggressively, knowing the top marginal tax rate on those gains is lower.

Who Actually Benefits from This Change?

Because this provision specifically caps the rate on the excess amount of adjusted net capital gain—meaning the profits that fall into the highest tax brackets—the primary beneficiaries are high-net-worth individuals and those with major investment income. If you’re only realizing a few thousand dollars in capital gains a year, you’re likely already in the 0% or 15% bracket, so this cap won't change your tax situation. However, for those making investment moves that put them into the current 20% capital gains bracket, this new 15% cap is a direct tax cut on their highest earnings.

This change also simplifies the tax code slightly by removing an existing, likely redundant, rule (subparagraph (D) of Section 1(h)(1)). While simplification is usually a win, the trade-off here is potential federal revenue loss. Lowering the tax rate on top-tier investment profits means the federal government will collect less from the wealthiest investors. While the hope is that this encourages enough new investment activity to offset the revenue loss, that’s a big assumption, and it could put a strain on the budget if the economic boost doesn't materialize as planned.