Did Capital Gains Tax Change In 2018

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Capital Gains Rates Before and After the New Tax Police

Are yous dislocated nearly the federal income revenue enhancement rates on capital gains and dividends under the Tax Cuts and Jobs Act (TCJA)?

If and then, you're not lonely. Here's what you should know if y'all plan to sell long-term investments or await to receive dividend payments from your investments.

Old Rules

Prior to the TCJA, private taxpayers faced iii federal income tax rates on long-term capital gains and qualified dividends: 0%, fifteen%, and 20%. The charge per unit brackets were tied to the ordinary-income rate brackets.

Specifically, if the long-term capital gains and/or dividends savage inside the 10% or fifteen% ordinary-income brackets, no federal income tax was owed. If they fell within the 25%, 28%, 33%, or 35% ordinary-income brackets, they were taxed at 15%. And, if they fell within the maximum 39.half dozen% ordinary-income bracket, they were taxed at the maximum 20% rate.

In improver, college-income individuals with long-term capital gains and dividends were also hitting with the 3.8% net investment income tax (NIIT). So, many people actually paid 18.viii% (fifteen% + iii.8% for the NIIT) or 23.eight% (20% + 3.8% for the NIIT) on their long-term capital gains and dividends.

New Rules

The TCJA retains the 0%, 15%, and 20% rates on long-term uppercase gains and qualified dividends for individual taxpayers. However, for 2018 through 2025, these rates take their own brackets that are not tied to the ordinary-income brackets. Here are the 2018 brackets for long-term capital gains and qualified dividends:

Revenue enhancement Rates	Single	Married Joint Filers	Head of Household
0%	$0 – $38,600	$0 – $77,200	$0 – $51,700
fifteen%	$38,601 – $425,800	$77,201 – $479,000	$51,701 – $452,400
twenty%	$425,801 and up	$479,001 and up	$452,401 and up

After 2018, these brackets volition be indexed for aggrandizement.

The new tax police also retains the 3.8% NIIT. So, for 2018 through 2025, the tax rates for higher-income people who recognize long-term capital gains and dividends volition actually exist 18.8% (fifteen% + 3.8% for the NIIT) or 23.8% (xx% + 3.8% for the NIIT).

Rates for Trusts and Estates

For 2018, the brackets for trusts and estates that collect long-term uppercase gains and qualified dividends are as follows:

Revenue enhancement Charge per unit	Long-term capital gains and qualified dividends
0%	$0 – $2,600
15%	$2,601 – $12,700
twenty%	$12,701 and up

For 2018 through 2025, the TCJA stipulates that these trust and estate rates and brackets are also used to calculate the and then-called "kiddie tax" when it applies to long-term capital letter gains and qualified dividends collected by dependent children and immature adults. The kiddie tax tin can potentially employ until the year that a dependent young adult turns historic period 24. (Nether prior law, the kiddie tax was calculated using the marginal rates paid past the parents of affected children and young adults.)

Got Questions?

In a nutshell, the new law keeps the same tax rates for long-term capital gains and qualified dividends, but the rate brackets are no longer tied to the ordinary-income tax brackets for individuals. If you accept questions or want more than information about how long-term capital gains and qualified dividends are taxed under the TCJA, contact your tax advisor.

Paying Taxes on Short-Term Capital Gains

As under prior law, the Tax Cuts and Jobs Act (TCJA) taxes short-term capital gains recognized past individual taxpayers at the regular ordinary-income rates. For 2018, the ordinary-income rates and brackets are every bit follows:

Paying Taxes on Short-Term Capital Gains

As under prior law, the Tax Cuts and Jobs Human action (TCJA) taxes short-term uppercase gains recognized by individual taxpayers at the regular ordinary-income rates. For 2018, the ordinary-income rates and brackets are as follows:

Tax Rates	Single	Married Joint Filers	Head of Household
10%	$0 – $9,525	$0 – $19,050	$0 – $thirteen,600
12%	$nine,526 – $38,700	$19,051 – $77,400	$13,601 – $51,800
22%	$38,701 – $82,500	$77,401 – $165,000	$51,801 – $82,500
24%	$82,501 – $157,500	$165,001 – $315,000	$82,501 – $157,500
32%	$157,501 – $200,000	$315,001 – $400,000	$157,501– $200,000
35%	$200,001 – $500,000	$400,001 – $600,000	$200,001 – $500,000
37%	$500,001 and up	$600,001 and up	$500,001 and upwardly