The 2022 capital gains tax rate thresholds are exceeded – what rate will you pay?

If you sell stocks, mutual funds, or other capital property that you have owned for at least one year, any gain from the sale is taxed at a rate of 0%, 15%, or 20%. These tax rates for long-term capital gains are usually much lower than the regular tax rates you would pay otherwise, which can currently be as high as 37%.

However, which of these capital gains rates – 0%, 15%, or 20% – applies to you depends on your taxable income. The higher your income, the higher the rate.

The taxable income thresholds for capital gains tax rates are adjusted annually for inflation. IRS has already published 2022 thresholds (see table below), so you can start planning asset sales for 2022 now.

Capital gains tax rate thresholds 2022

Capital gains
Tax rate

Taxable income
(Alone)

Taxable income
(Married Separate Deposit)

Taxable income
(Head of household)

Taxable income
(Married Filing Jointly)

0%

Up to $ 41,675

Up to $ 41,675

Up to $ 55,800

Up to $ 83,350

15%

$ 41,675 to $ 459,750

$ 41,675 to $ 258,600

$ 55,800 to $ 488,500

$ 83,350 to $ 517,200

20%

Over $ 459,750

Over $ 258,600

Over $ 488,500

Over $ 517,200

Tax on net investment income

There is an additional 3.8% surtax on net investment income (NII) that you may have to pay in addition to capital gains tax. (NII includes, among other things, taxable interest, dividends, earnings, passive rents, annuities, and royalties.) You must pay the surtax if you are a single taxpayer with modified adjusted gross income greater than $ 200,000 , a married couple filing a joint return with an amended AGI greater than $ 250,000, or a married person filing a separate return with an amended AGI greater than $ 125,000.

Note that in the current version of President Biden’s Build Back Better plan which is being considered by Congress, the surcharge would be expanded from 2022 to cover the NII derived in the ordinary course of trade or business for the single filer. or head of household. with an amended AGI greater than $ 400,000, a joint filer with an amended AGI greater than $ 500,000 and a married person filing a separate return with an amended AGI greater than $ 250,000. The plan would also clarify that the surcharge does not apply to wages on which social security and health insurance payroll taxes (i.e. FICA taxes) are already imposed.

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