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Understanding Capital Gains Tax
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Short-Term Capital Gain
Taxed as ordinary income based on tax brackets, which can range from 10% to 37%.
Long-Term Capital Gain
Preferentially taxed at 0%, 15%, or 20%, depending on the taxpayer's income.
Short-Term Capital Gain for High-Income Earners
Taxed at the same rates as ordinary income, potentially at the top marginal rate of 37%.
Long-Term Capital Gains for Low to Middle-Income Earners
Potentially taxed at 0% if taxable income falls below certain thresholds.
Collectible Assets Long-Term Capital Gain
Taxed at a maximum rate of 28%, whether the taxpayer is high or low-income.
Real Estate Long-Term Capital Gain
Potentially reduced by the primary residence exclusion of up to 500,000 for married couples filing jointly).
Short-Term Capital Gain for a Low-Income Earner
Taxed at ordinary income rates, which could be as low as 10% if the taxpayer falls into the lowest tax bracket.
Long-Term Capital Gains With Investment Income Tax
In addition to the base rate (0%, 15%, or 20%), a 3.8% Net Investment Income Tax may apply for individuals earning over a certain threshold.
Capital Loss Deduction Limits
Limited to
Depreciable Real Property (Unrecaptured Section 1250 Gain)
Taxed at a maximum 25% rate if it exceeds straight-line depreciation.
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