taxes

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

20 percent capital gains tax rate

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 whose income is in the top tax bracket -- that 39.6 percent tax rate -- will face a 20 percent capital gains rate on profits from long-term asset sales.

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 rate, regardless of which tax bracket your income falls into.

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