The Capital Gains Tax

The budget deal brokered between Congress and the White House promises long-sought relief on capital gains, but will provide only a marginal benefit to the biotech sector, according to initial reactions by biotech investors and executives.

The new capital gains rates would fall from as high as 39.6 percent to 28 percent on assets held at least a year, and to 20 percent on assets held longer than 18 months. On the downside, there is no inflation indexing for capital gains. Instead, starting in 2001, investors who hold an asset for five years have the gains taxed at an 18 percent.