Capital gains are subject to different tax rates from "summary" of Income Tax Fundamentals 2021 by Gerald E. Whittenburg,Martha Altus-Buller,Steven Gill
Capital gains are subject to different tax rates depending on how long the taxpayer holds the investment before selling it. Short-term capital gains are those from the sale of assets held for one year or less. Short-term capital gains are taxed at the same rates as ordinary income, which can be as high as 37% for individuals in the highest tax bracket. On the other hand, long-term capital gains are from assets held for more than one year. Long-term capital gains are subject to preferential tax rates that are generally lower than those for ordinary income and short-term capital gains. For most taxpayers, the long-term capital gains tax rates are 0%, 15%, or 20%. The specific long-term capital gains tax rate that applies depends on the taxpayer's filing status and taxable income. Taxpayers with lower incomes may qualify for the 0% long-term capital gains tax rate, while those with higher incomes may be subject to the 15% or 20% rate. In some cases, higher-income taxpayers may also be subject to an additional 3.8% Net Investment Income Tax on their capital gains.- As this can have a significant impact on their overall tax liability. By understanding the tax implications of buying and selling investments, taxpayers can make informed decisions that help them minimize their tax burden and maximize their after-tax returns.
Similar Posts
Spend extravagantly on the things you love
When it comes to spending money, many people are often told to cut back on expenses and save as much as possible. However, this...
Use tax planning to protect your assets and minimize estate taxes
Tax planning is a crucial aspect of managing your wealth. By being proactive and implementing strategic tax planning strategies...
Focus on acquiring assets that appreciate in value
Acquiring assets that appreciate in value is a key principle in the world of finance. It involves investing in assets that have...
Research individual stocks before making investment decisions
Before you decide to invest in a particular stock, it is essential that you do your homework. By researching individual stocks,...
Exit loads and taxation
Exit loads and taxation are two important aspects to consider when investing in mutual funds. Exit loads are fees charged by th...
Managing risk through diversification
Diversification is a fundamental principle when it comes to managing risk in investing. Essentially, it involves spreading your...
Be aware of your risk tolerance and adjust your investments accordingly
Understanding your risk tolerance is a critical aspect of successful investing. It is essential to know how much risk you can c...
Keep track of your expenses
Keeping track of your expenses is a crucial step in achieving financial stability. By meticulously recording every purchase you...
Future value calculation is essential
Understanding the concept of future value calculation is crucial in the world of finance. This calculation allows individuals a...
Antitrust laws prevent anticompetitive behavior
Antitrust laws are designed to maintain competition in the economy by preventing harmful practices that obstruct the competitiv...