What Is the Federal Long Term Capital Gains Tax Rate for 2017?
The federal long-term capital gains tax rate for 2017 varies depending on your taxable income. Long-term capital gains are profits made from the sale of assets held for more than a year. These gains are generally taxed at a lower rate than short-term capital gains, which are profits made from the sale of assets held for less than a year.
For individuals with taxable income below certain thresholds, the long-term capital gains tax rate is 0%. This means that if your taxable income falls within the 10% or 15% tax brackets, you won’t owe any federal tax on your long-term capital gains.
For individuals with taxable income above the 15% tax bracket, the long-term capital gains tax rates are as follows:
– 20%: This rate applies to individuals with taxable income above $441,450 (for single filers) or $496,600 (for married filing jointly).
– 15%: This rate applies to individuals with taxable income between $37,950 and $441,450 (for single filers) or between $75,900 and $496,600 (for married filing jointly).
– 0%: This rate applies to individuals with taxable income between $0 and $37,950 (for single filers) or between $0 and $75,900 (for married filing jointly).
It’s worth noting that these rates apply to the federal tax on long-term capital gains only. State taxes may also apply, and the rates can vary by state.
FAQs:
1. What is the difference between long-term and short-term capital gains?
Long-term capital gains are profits made from the sale of assets held for more than a year, while short-term capital gains are profits made from the sale of assets held for less than a year.
2. Are there any special rules for capital gains from the sale of a primary residence?
Yes, there are special rules. If you meet certain requirements, you may exclude up to $250,000 of capital gains on the sale of your primary residence ($500,000 if filing jointly).
3. Do these rates apply to all types of assets?
No, these rates generally apply to most types of assets, including stocks, bonds, real estate, and collectibles. However, some assets, like certain types of art and collectibles, may be subject to different rates.
4. Do these rates apply to inherited assets?
No, inherited assets are subject to different rules. In most cases, the basis of the inherited asset is “stepped-up” to its fair market value at the time of the original owner’s death.
5. Can I offset capital gains with capital losses?
Yes, you can offset capital gains with capital losses. If your capital losses exceed your capital gains, you can use the remaining losses to offset up to $3,000 of other income ($1,500 if married filing separately).
6. Are there any exceptions to the long-term capital gains tax rates?
Yes, there are certain exceptions. For example, collectibles and certain small business stock may be subject to a maximum tax rate of 28%.
7. What is the difference between the tax rate on long-term capital gains and ordinary income?
The tax rate on long-term capital gains is generally lower than the tax rate on ordinary income. The maximum tax rate on long-term capital gains is 20%, while the maximum tax rate on ordinary income is 37% (for 2017).
8. How do I calculate my taxable income?
Taxable income is calculated by subtracting deductions and exemptions from your total income. It is the amount of income that is subject to tax.
9. Are there any additional taxes on capital gains?
In addition to the federal capital gains tax, there may be an additional 3.8% net investment income tax for individuals with modified adjusted gross income above certain thresholds ($200,000 for single filers, $250,000 for married filing jointly).
10. Are there any strategies to reduce capital gains taxes?
There are several strategies to reduce capital gains taxes, such as tax-loss harvesting, charitable giving, and utilizing tax-advantaged accounts like IRAs and 401(k)s.
11. Can I defer capital gains taxes?
Yes, you can defer capital gains taxes by utilizing certain investment vehicles like 1031 exchanges or Opportunity Zones.
12. Will the federal long-term capital gains tax rates change in the future?
The federal long-term capital gains tax rates can change with new legislation. It’s important to stay informed about potential changes to tax laws that may affect your capital gains tax obligations.