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Level 2

Question

Long Term Capital Gains Rate

Forum|Forum|3 years ago
June 22, 2023
6 replies
33 views

I understand that Long Term Capital Gains are included in AGI, which in turn determines the LTCG tax rate. I'm married filing jointly, so the 15% rate begins at $89,250 of taxable income. So, if my ordinary income is $75K, and I have $20K of LTCG, that pushes me over the $89,250 threshold. Is all of my LTCG then taxed at 15%, or just the amount that exceeds $89,250, i.e. $5,750?

Level 15

Only the amount that is over the threshold is taxed at the higher rate.

stickman7Author

Level 2

Thank you, this was what I was hoping would be the case.

Level 15

The $89,250 threshold is for 2023. For 2022 the 15% rate for long-term capital gain begins at $83,350 for married filing jointly.

Level 15

In this example of 2023 income, and assuming that taxable income is $95,000, $14,250 of LTCG would be taxed at 0% and $5,750 would be taxed at 15%. If AGI is $95,000, taxable income would be below $89,250 and all of the LTCG would be taxed at 0%.

stickman7Author

Level 2

Thanks for the clarification. I should have specified "taxable income" instead of AGI.

Level 15

@stickman7 - use this website and you can see your questions and the answers play out:

https://www.dinkytown.net/java/1040-tax-calculator.html