There isn't a fixed tax rate. The tax rate is graduated. The more money you make, the higher the tax rate.
Yes, if you take out smaller amounts, over a number of years, generally, you'll pay less in taxes but it also depends on what other income you have, what deductions and credits you're eligible for and what your cost basis is in the mutual funds.
For example:
- Scenario 1: If you sell $35,000 worth of Mutual funds but your cost basis is $40,000, then you have a $5,000 loss so your taxes would generally go down.
- Scenario 2: If you sell $35,000 worth of Mutual funds buy your cost basis is $10,000, then you have a $20,000 gain that gets added to your income.
- Please see What is a Tax Bracket?
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