![]() People under age 59½ can take more penalty-free early withdrawals from IRAs and 401(k)s. Up to $10,000 for domestic abuse victims and $1,000 for emergencies can be taken without paying the 10% additional tax.Among the changes that take effect this year are the following. Use Form 8960 to calculate the surtax.The SECURE 2.0 Act of 2022 bolsters retirement savings, with over 90 provisions with different effective dates. You must pay the surtax if you're a single or head-of-household taxpayer with modified adjusted gross income (AGI) over $200,000, a married couple filing a joint return with modified AGI over $250,000, or a married person filing a separate return with modified AGI over $125,000. (NII includes, among other things, taxable interest, dividends, gains, passive rents, annuities, and royalties.) There's an additional 3.8% surtax on net investment income (NII) that you might have to pay on top of the capital gains tax. Also, the rate doesn't apply to short-term gains. Instead, your ordinary tax rate will apply. So, if your ordinary income tax rate is lower, you won't have to pay that much. Once again, the 25% rate is a maximum rate. For most people, this only comes up if you sell rental property. The rest of your long-term gain is taxed at either the 0%, 15% or 20% rate. The taxable amount is known as "unrecaptured Section 1250 gain" (named after the tax code section covering gain from the sale or other disposition of certain depreciable real property). If you sell real estate for which you previously claimed a depreciation deduction, you may have to pay a capital gains tax of up to 25% on any unrecaptured depreciation. Capital gains tax rate for previously deducted depreciation ![]() The 28% rate doesn't apply to short-term capital gains from the sale of QSBS. However, for any gain that is not exempt from tax, a maximum capital gains tax rate of 28% applies.Īs with the 28% rate for collectibles, if your ordinary tax rate is below 28%, then that rate will apply to taxable QSBS gain. If you sell " qualified small business stock" (QSBS) that you held for at least five years, some or all of your gain may be tax-free. Capital gains tax rate for Qualified Small Business Stock So, if you don't own a collectible for at least one year before selling it, you'll still be taxed on any gain at your ordinary tax rate (between 10% and 37%). ![]() The 28% limit doesn't apply to short-term capital gains. But if you're in a higher tax bracket (i.e., 32%, 35% or 37%), then the capital gains tax on your collectible gains is capped at 28%. ![]() If your ordinary tax rate is lower than 28%, then that rate will apply. Instead of a 20% maximum tax rate, long-term gains from the sale of collectibles can be hit with a capital gains tax as high as 28%. If you sell an interest in a partnership, S corporation, or trust, any gain from that sale attributable to the unrealized appreciation in the value of collectibles is also treated as gain from the sale of collectibles. Perhaps the most common exception involves gains from the sale of collectibles that qualify as capital assets.įor this special rule, a "collectible" can be a work of art, antiques, stamp, coin, bottle of wine or other alcoholic beverage, gold or other precious metal, gem, historic object, or another similar item. There are a few exceptions to the general capital gains tax rates. So, in most cases, you can save on taxes by holding capital assets like stocks, bonds, and real estate for more than one year before selling. Generally, the rate you pay for long-term capital gains is less than the rate you pay for short-term gains. For the ordinary tax rate that applies to you, see 2023 Federal Income Tax Brackets and Rates. The income thresholds for each tax rate are also adjusted annually for inflation. Those rates currently range from 10% to 37%, depending on your taxable income. The tax rate on short-term capital gains (i.e., from the sale of assets held for one year or less) is the same as the rate you pay on wages and other "ordinary" income. To see how all the taxable income thresholds changed from 2023 to 2024, here are the figures for the 2024 tax year (that you'll use for returns filed in early 2025).Ģ024 Long-Term Capital Gains Tax Rate Income Thresholds Without an adjustment to match the rise in inflation, more people would end up paying a higher rate in 2024 than they did in 2023. However, that's a good thing for taxpayers, especially for people with a stagnate income or an income that grows slower than the rate of inflation. The IRS has already released the 2024 thresholds, so you can start planning for 2024 capital asset sales now. The income thresholds for the long-term capital gains tax rates are adjusted each year for inflation.
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