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5 higher taxes for wealthy taxpayers

Taxes » Tax Filing » 5 Higher Taxes For Wealthy Taxpayers

20 percent capital gains tax rate
20 percent capital gains tax rate © Andrey_Popov/Shutterstock.com

On the investment side, wealthier taxpayers also will pay higher taxes.

The previous top capital gains rate was 15 percent on profits from assets held for more than a year before selling. That long-term capital gains tax rate applied to taxpayers whose income fell into the 25 percent or higher tax bracket.

The American Taxpayer Relief Act changed that. Now individuals with income of more than $400,000, or $450,000 for married couples filing jointly and qualifying widows/widowers, must pay 20 percent on their long-term capital gains. That higher tax rate also applies to head of household filers earning more than $425,000, or $225,000-plus for those who are married filing separately.

All short-term capital gains, those from sales of assets held for a year or less than a year, continue to be taxed at your ordinary income tax rates.

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