Capital
Gain Tax Rates
If you have a
net capital gain, a lower tax rate may apply to the gain than the tax rate that
applies to your ordinary income. The term "net capital gain" means
the amount by which your net long-term capital gain for the year is more than
your net short-term capital loss for the year. The term "net long-term
capital gain" means long-term capital gains reduced by long-term capital
losses including any unused long-term capital loss carried over from previous
years.
The tax rate on most net capital gain is no higher than 15% for most
taxpayers. Some or all net capital gain may be taxed at 0% if you're in the 10%
or 15% ordinary income tax brackets. However, a 20% tax rate on net capital
gain applies to the extent that a taxpayer's taxable income exceeds the
thresholds set for the 39.6% ordinary tax rate ($418,400 for single; $470,700
for married filing jointly or qualifying widow(er); $444,550 for head of
household, and $235,350 for married filing separately).
