Table source: Author. Data Source: IRS.
This is the real tax deal
The long-term capital gains rates are the true prize for investors. You can drastically drop your tax bill after holding your investments for over a year. Long-term investors unlock the 0%, 15%, and 20% capital gains rates. The IRS expanded the income range for each tax bracket so you’ll be able to make a bit more money before your income tips into the next bracket.
Most people will fall into the 15% tax bracket. For those who have a lower taxable income this year, you could bypass taxes altogether. There’s a 0% tax bracket for single filers who have taxable income under $41,676. You can sweeten the pot if you’re filing as a married couple. You and your spouse can earn up to $83,350 before you have to pay taxes on your long-term gains.
Let’s say a couple’s total taxable income from working a job and capital gains is $83,000. The couple could pay 0% on profits for stocks held over a year if they are married filing jointly.
Here are the 2022 and 2021 capital gains rates:
2022 long-term capital gains tax brackets
|
For single filers with taxable income of… |
For married joint filers with taxable income of… |
For heads of households with taxable income of… |
…this is the long-term capital gains rate |
|---|---|---|---|
|
$0 to $41,675 |
$0 to $83,350 |
$0 to $55,800 |
0% |
|
$41,676 to $459,750 |
$83,351 to $517,200 |
$55,801 to $488,500 |
15% |
|
Over $459,750 |
Over $517,200 |
Over $488,500 |
20% |
