If a taxpayer is in the 10% or 15% tax bracket this year, capital gains and dividend income are tax free until the taxable income is $72,500 for joint filers and $36,250 for single filers. At this point the taxpayer would be paying 15%on the capital gains and dividend income.

But, taxpayers who are in the 39.6% tax bracket would have to pay a 25% tax rate on the capital gains and dividend income.

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