| What would be the Tax Rate for a Married Filing Joint Tax Return whose Taxable Income is entirely from Capital Gains in 2013?
For example, if a Married Filing Joint Taxpayer, whose taxable income is $300,000 and due entirely to all long term capital gain, "what would be their tax rate in 2013?
According to the new tax law in effect in 2013, "if a married couple is below the $450,000 threshold, they will continue to pay tax at the 15% rate for long term gains, or 15% on $300,000 which is $45,000.
For example, if a Married Filing Joint Taxpayer, whose taxable income is $480,000 and due entirely to all long term capital gain, "what would be their tax rate in 2013?
When the taxpayer exceeds the $450,000 threshold, it is only the incremental amount taxed at the higher rate. Therefore a taxpayer with $480,000 of long term gain will only pay the increased 20% rate on $30,000 ($480,000 - $450,000) which is $6,000, and continue to pay 15% on $450,000 or $67,500.
Thus, for a long term capital gain of $480,000 earned in 2013, the aggregate tax liability would be $73,500 ($6,000+67,500).
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