2019 Capital Gains Tax Brackets
2021 Capital Gains Tax Brackets
Since the fiscal year 2019 started on October 1, it's time to start preparing for your taxes. One of the key factors when doing this is to decide which tax bracket you'll fall under. The capital gains tax brackets for profits and losses depend on how long you've held the asset for.
Here are the capital gains tax brackets for the 2021 tax season.
Long-Term Capital Gains Tax Brackets
The thresholds for long-term capital gains are the same as capital gains from the prior year, with a few exceptions. Short-term gains are taxed just like ordinary income. The following table outlines the capital gains tax brackets for long-term gains. The thresholds are based on adjusted gross income.
Net Investment Income Tax
Prior to 2018, capital gain taxes on assets were deductible from your income for tax purposes. You were also able to deduct your capital losses from your income, offsetting your gains. In tax-speak, this tax deduction was known as the net investment income tax, or Net Investment Income Tax (NIIT).
The NIIT is calculated by determining the amount of income left over after subtracting out your reimbursed losses, as well as your personal deductions. This amount is then divided by your modified adjusted gross income (MAGI). The resulting amount is your net investment income tax, which must be paid on any capital gains in addition to your income taxes.
The Trump administration’s Tax Cuts and Jobs Act of 2017 amended the capital gain tax structure, making the former Net Investment income tax now a simple flat tax on capital gains and qualifying dividends. This change eliminated the need for the NIIT, but it also leaves capital gains taxes without the benefit of the deduction.
How Does the Net Investment Income Tax Affect the Tax Brackets?
The way this works is the same for every bracket of income. Your taxable income is determined by subtracting out your personal deductions and all capital losses from your wages and other earned income.
For a married couple filing jointly, here’s how much income is taxed under the previous NIIT and the current tax brackets:
A Capital Gains Tax Wrap-up
It’s that time of year again, as the IRS has released its guidance for the 2018 tax year on income that is received in 2017.
However, this is critical information to learn about before the end of the year, as it can potentially save you a lot of money.
This includes capital gains tax rates for the upcoming year.
For the 2017 tax year, the income ranges for each tax bracket are shown in the below chart:
As you can see, the capital gains tax rate for the new tax year is nearly unchanged from that of the previous year.
The capital gains tax rate for the 2016 tax year was the same as that of the 2015 tax year.
The capital gains tax rate for the 2015 tax year was the same as that of the 2014 tax year.
The capital gains tax rate for the 2014 tax year was the same as that of the 2013 tax year.
The capital gains tax rate for the 2013 tax year was lower than it had been for the 2012 tax year.
The capital gains tax rate for the 2012 tax year was higher than it had been for the 2011 tax year.
The capital gains tax rate for the 2011 tax year was higher than it had been for the 2010 tax year.