Capital gains tax rates
Understanding the thresholds for long-term capital gains tax, especially for different filing statuses, is of utmost importance. If you hold an asset for one year or less, the gains can be taxed at ordinary income tax rates. However, if you hold the asset for over a year, the long-term capital gains tax rates come into play. These rates, which can range from 0% to 20%, depending on your filing status, can significantly impact your tax obligations. By grasping these thresholds, you can better manage your tax obligations and make more informed financial decisions.
Please see the IRS link below in determining the above.
https://www.irs.gov/taxtopics/tc409
Below are the IRS progressive tax rate for long-term capital gains.
A capital gains rate of 0% applies if your taxable income is less than or equal to:
- $48,350 for single and married filing separately;
- $96,700 for married filing jointly and qualifying surviving spouse; and
- $64,750 for head of household.
A capital gains rate of 15% applies if your taxable income is:
- more than $48,350 but less than or equal to $533,400 for single;
- more than $48,350 but less than or equal to $300,000 for married filing separately;
- more than $96,700 but less than or equal to $600,050 for married filing jointly and qualifying surviving spouse; and
- more than $64,750 but less than or equal to $566,700 for head of household.
However, a capital gains rate of 20% applies to the extent that your taxable income exceeds the thresholds set for the 15% capital gain rate.
