CBO’s Projections of Realized Capital Gains Subject to the Individual Income Tax
This slide deck provides additional information about CBO’s February 2023 baseline projections of capital gains realizations, which decrease from an estimated high of 8.7 percent of GDP in 2021 down to 3.7 percent of GDP by 2033.
Newly available data indicate that capital gains realizations in 2021 were unusually large. Those gains help explain the recent strength in receipts from individual income taxes.
In the near term, capital gains can be challenging to project because realizations tend to fluctuate more than other economic variables or revenue sources.
In the longer term, the Congressional Budget Office expects capital gains realizations to approach their historical average relative to the size of the economy, after adjusting for differences between historical tax rates and those in the projection period.
In CBO’s February 2023 baseline projections, capital gains realizations decrease from an estimated high of 8.7 percent of gross domestic product (GDP) in 2021 to a long-run average of 3.7 percent of GDP by 2033.