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REVISITING Tax Rates

Investors get a tax break on their net capital gain, defined as the excess of net long-term capital gain over net short-term capital loss.*

Generally, the tax rate on most net capital gain is no higher than 15%, although a 20% rate can apply to some or all net capital gain if an investor is in the highest ordinary income-tax bracket. And investors in the 10% or 15% ordinary income-tax bracket may enjoy a 0% rate (i.e., no tax) on some or all of their net capital gain.

Aside from the 20% and 0% rates just mentioned, there are a few other exceptions to the 15% rate:

Net capital gain from selling collectibles is taxed at a maximum 28% rate
Real property gain attributable to depreciation is taxed at a maximum 25% rate
A percentage of qualified small business stock gain is excluded, and the remainder is taxed at a maximum 28% rate
* The long-term holding period is more than one year.