The Tax Cuts and Jobs Act has kept in place the favorable capital gains tax rates.
Current Law
Through December 31, 2017
Net capital gain for a non-corporate taxpayer (individual, estate, or trust) is taxed at maximum rates of 0%, 15%, or 20%. 0% capital gains rate is applied to capital gains that otherwise would be taxed at the marginal tax rate of 10% or 15%. The 15% capital gains rate is applied to capital gains that otherwise would be taxed above the 15% marginal tax rate but below the 39.6% marginal tax rate. The 20% capital gains rate is applied to capital gains that otherwise would be taxed at the 39.6% marginal tax rate.
New Law
Effective for tax years beginning after December 31, 2017, and before January 1, 2026
The 0% capital gains rate will apply to adjusted net capital gain that’s below the “maximum zero rate amount.” This amount is $77,200 for joint returns or surviving spouses, $51,700 for head of household, and $38,600 for single or married filing separate. The 15% capital gains rate will apply to adjusted net capital gain that exceeds the amount subject to the 0% rate and that is below the “maximum 15% rate amount.” This amount is:
- $479,000 for joint returns or surviving spouses
- $452,400 for head of household
- $425,800 for single
- $239,500 for married filing separate
The 20% capital gains rate is applied to adjusted net capital gain over the “maximum 15% rate amount” for each filing status.
Commentary
The maximum rate amounts are levels of taxable income in determining which capital gain rate will apply. The 3.8% Net Investment Income Tax and the 0.9% Additional Medicare Tax have not been repealed as part of this tax bill.
