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New Member
posted Mar 13, 2023 4:20:48 PM

Was there a rise in Capital gains percentage in 2022?

In 2021 I had taxable income of $87408..taxes were $6908...7.9% of TI.  In 2022 I had taxable income of $67379...taxes were $6498...9.64% of TI.  Why?

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4 Replies
Level 15
Mar 13, 2023 4:43:57 PM

The tax as an overall percentage of taxable income doesn't mean anything because your taxable income is not all taxed at the same rate. Portions of your taxable income fall in different tax brackets, and different types of income are taxed at different rates.


The tax brackets, for both ordinary income and long-term capital gains, are adjusted every year. The percentages remain the same, but the boundaries between brackets change.


There is one set of rates that applies to ordinary income, including nonqualified dividends and short-term capital gain. There is a different set of rates that applies to qualified dividends and long-term capital gain. So your overall percentage of tax will vary depending on how much of your total taxable income is in each rate category.

 

Expert Alumni
Mar 13, 2023 4:44:56 PM

No, the capital gains rates did not change. However, your income subject to capital gains may have changed form last year to this year. 

  • Please review your Form 1040 Line 16, by printing out the Schedule D Tax Worksheet.

Also, you may not be eligible for deductions or credits that you were eligible for in 2021 versus 2022. 

 

[Edited 03-13-2023|4:46 PM PST]

@jakeandmary2020 

 

 

 

Level 15
Mar 13, 2023 4:57:38 PM

It's not clear what you're looking at when you state the amount of your "taxes." Are you looking at the tax on Form 1040 line 16, or are you looking at the total tax on Form 1040 line 24, or some other tax amount? The tax on line 16 is based on the taxable income on line 15, but at various rates, as I said above. But there may be other taxes included in line 24 in addition to the tax on line 16. The other taxes are not based on the taxable income on line 15.

 

New Member
Mar 16, 2023 10:32:44 AM

Thanks for a pretty well understood reply.

Much better than the first answer..."What do you mean by "taxes"?!!