2. Sales of Stocks, Bonds and Mutual Funds
If you have stock, you know what this is about. And if you happen to have had it for more than a year (it’s also the case for bonds or mutual funds), the proceeds are taxed at long-term capital gains rates from 0 to 20%.
These are based on set income thresholds that are adapted for inflation.
For example, this year, the 0% rate applies to those with taxable income up to $41,675 on single returns, $55,800 for head of household filers, and no more than $83,350 for joint returns.
When it comes to the 20% rate, it starts at $459,751 for single filers, $488,501 for heads of household, and $517,201 for joint filers.
What you must keep in mind is that if you want to sell all the investments that you’ve held for a year or less than a year, you will be taxed at your ordinary income tax rate. And the gains are short-term.
