What Is the Long-Term Capital Gains Tax Rate for 2017?
The long-term capital gains tax rate refers to the tax rate applied to profits made from the sale of assets held for more than one year. These assets include stocks, bonds, real estate, and other investments. The long-term capital gains tax rate is generally lower than the tax rate applied to short-term capital gains, which are profits made from the sale of assets held for one year or less. The purpose of this lower tax rate is to incentivize long-term investment and promote economic growth.
For the tax year 2017, the long-term capital gains tax rate varies depending on the taxpayer’s income level. The rates for individuals can range from 0% to 20%, while the rates for corporations are generally 35%. The specific rates can be determined based on the taxpayer’s taxable income and filing status.
Here is a breakdown of the long-term capital gains tax rates for 2017 based on filing status and income level:
1. For single filers with a taxable income of up to $37,950, the long-term capital gains tax rate is 0%.
2. For single filers with a taxable income between $37,951 and $418,400, the long-term capital gains tax rate is 15%.
3. For single filers with a taxable income above $418,400, the long-term capital gains tax rate is 20%.
4. For married individuals filing jointly with a taxable income of up to $75,900, the long-term capital gains tax rate is 0%.
5. For married individuals filing jointly with a taxable income between $75,901 and $470,700, the long-term capital gains tax rate is 15%.
6. For married individuals filing jointly with a taxable income above $470,700, the long-term capital gains tax rate is 20%.
Frequently Asked Questions (FAQs):
1. What assets are subject to long-term capital gains tax?
Assets subject to long-term capital gains tax include stocks, bonds, real estate, and other investments held for more than one year.
2. What is the difference between short-term and long-term capital gains tax rates?
The main difference is the holding period of the asset. If an asset is held for one year or less, it is subject to short-term capital gains tax, which is generally higher than the long-term capital gains tax rate.
3. Are there any exceptions to the long-term capital gains tax rates?
Yes, certain collectibles such as art, coins, and precious metals are subject to a maximum tax rate of 28% regardless of the taxpayer’s income level.
4. Do long-term capital gains affect my overall tax bracket?
No, long-term capital gains are taxed separately from ordinary income and do not directly affect your tax bracket.
5. Can I offset long-term capital gains with capital losses?
Yes, capital losses can be used to offset capital gains, reducing the overall tax liability.
6. Are there any deductions or exemptions available for long-term capital gains?
There are no specific deductions or exemptions available for long-term capital gains. However, the standard deductions and other applicable deductions can still be claimed.
7. Can I defer paying long-term capital gains tax?
Yes, by using certain investment vehicles such as 1031 exchanges or qualified opportunity zones, you can defer paying long-term capital gains tax.
8. Is there a separate capital gains tax rate for high-income earners?
Yes, high-income earners may be subject to an additional 3.8% net investment income tax on their long-term capital gains.
9. Are long-term capital gains taxed at the state level?
Yes, some states have their own capital gains tax rates, which may differ from the federal rates.
10. Can I reduce my long-term capital gains tax through charitable donations?
Yes, donating appreciated assets to a qualified charity can help reduce your long-term capital gains tax liability.
11. How do I calculate my long-term capital gains tax?
To calculate your long-term capital gains tax, subtract the cost basis of the asset from the selling price, then apply the relevant long-term capital gains tax rate.
12. Can I carry forward long-term capital losses to future years?
Yes, you can carry forward capital losses to offset future capital gains for up to three years.
Understanding the long-term capital gains tax rate for 2017 is crucial for investors and taxpayers alike. By taking advantage of the lower tax rates for long-term investments and exploring various tax planning strategies, individuals can optimize their investment returns while staying compliant with the tax laws. It is always advisable to consult with a tax professional or financial advisor to ensure accurate tax planning and decision-making.