February 8, 2014
What is the long term capital gains rate per income level. Why should you care?
What is the long term capital gains rate per income level. Why should you care?
For people who fall in to these tax brakets their capital gains income is taxed at these levels.
0% if taxable income falls in the 10% or 15% marginal tax brackets, 15% if taxable income falls in the 25%, 28%, 33%, or 35% marginal tax brackets. 20% if taxable income falls in the 39.6% marginal tax bracket. 25% on Depreciation Recapture. 28% on Collectibles. 28% on qualified small business stock after exclusion. You should care because you could pay alot less in taxes if you make a large percentage or even just any percentage of you income in long term capital gains. For someone like me, I really wont pay capital gains until I get a better job after college, so now I dont pay the capital gains due to my low income level.
You nailed it, Garrett. Well done! Let’s review.
You want to work at earning long term capital gains (securities like stocks and bonds held more than 1 year) to reduce your taxes. One of the most efficient ways to do this is by owning no-load index mutual funds. Garrett identified the long term capital gains rates per income level. Here is the same information broken down even more.
You will pay 0% in long term capital gains in 2013 as a single person if your income is under $46,900 ($10,000 in a personal exception and standard deduction, and then followed by $36,900 in taxable income). This would place you in the 15% tax bracket. Deductions and credits are not factored in to this explanation. The numbers for a married couple would be higher.
When your income goes above that amount you will pay 15% unless your income gets very high. These rates are much lower than regular earned income rates (short term capital gains fall in this category), which is why we should strive to save our money and earn long term capital gains on our investments. You can learn more by going here: http://taxes.about.com/od/Federal-Income-Taxes/fl/Federal-Income-Tax-Rates-for-the-Year-2014.htm.