What is the 2023 capital gains tax rate?

The capital gains tax rate that applies to profits from the sale of stocks, mutual funds, or other capital assets held for more than a year (i.e., however, which of those long-term capital gain rates applies to you depends on your taxable income, 4 days ago). The tax rates for short-term gains are 10%, 12%, 22%, 24%, 32%, 35% and 37%. This leaves some planning opportunities to try to minimize taxes paid, but since the 0% bracket is relatively low, your earnings are likely to extend to other categories. This is good for long-term investors, as it allows an asset to increase in value over time without being taxed until the point of sale.

Upgrading occurs when people are pushed to higher tax brackets or when the value of credits and deductions is reduced due to inflation, rather than any increase in real income. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer's tax bill directly. This is because the capital gains distributions (also called capital gains dividends) paid to you by mutual funds (or other regulated investment companies) and real estate investment trusts (REITs) are also subject to previous CGT rules. If you use capital losses to reduce your taxable income as part of tax planning, consider the “laundering” rule that will penalize if you purchase similar or substantially identical shares or securities before a 30-day waiting period.

An important exception to a reduced long-term capital gain rate applies to collectible assets, such as antiques, works of art, coins, or even valuable wine vintages. Keep in mind that the Tax Foundation is a 501 (c) (educational) nonprofit organization and cannot answer specific questions about your tax situation or help you with the tax filing process. There are seven tranches of individual federal income taxes; the federal corporate tax system is flat. Another important exception is the Net Investment Income Tax (NIIT), which adds a 3.8% overtax to certain investment sales by individuals, inheritances and trusts above a set threshold.

The credit offsets the tax liability, the total amount of tax debt owed by an individual, corporation or other entity with a tax authority such as the Internal Revenue Service (IRS), and can even generate a refund, with earned income credit amounts calculated based on income and the number of children. Experts say you shouldn't have to pay income taxes, but I can't find anything in the forms or instructions that indicate that. One thing that surprises taxpayers at the end of the year is receiving a capital gains tax impact when they see their 1099 investment forms from their mutual fund provider. The above article is intended to provide generalized financial information designed to educate a wide segment of the public; it does not provide personalized advice on taxes, investments, legal, or other businesses and professionals.

It is sometimes referred to as a “hidden tax”, as it leaves taxpayers less well-off due to higher costs and “increased tranches”, while increasing the government's purchasing power. The IRS allows you to match your profits and losses for a given year to determine your net capital gain or loss.

Jacob Macdonnell
Jacob Macdonnell

Incurable zombieaholic. Passionate beer maven. Zombie trailblazer. Hipster-friendly coffee fanatic. Infuriatingly humble foodaholic.