In the US, if you hold onto a capital gains asset for more than a year and make less than $72k (married) or $36K (single) the effective tax rate on that asset is 0%, as it's considered a long-term capital gain. If in a higher income bracket, the lowest you can get it down to is 15%. Short term cap. gains are taxed at significantly higher rates.
This is one reason I might consider filling my 1040 separately from my wife next year.
The law-talkin' guys will correct me if I'm wrong, of course.
This is one reason I might consider filling my 1040 separately from my wife next year.
The law-talkin' guys will correct me if I'm wrong, of course.
The highest long term capital gains tax bracket is 20% + 3.8%(look up the new investment tax) + self-employment + state tax, which can come to 50%. And, that's just long term.
Short term is 39.6%. Yes, that one comes to 70% when you add up 3.5, 15, 3.7, and finally, state taxes.
If you live in NYC, don't forget to tack on some city taxes on top of that.
Yes, these "historically low" taxes can be as high as 80% marginal. Which really makes me wonder what 'historically high' really came out to when you tacked on state+fica+local+medicare, etc.
