Big Savings In Capital Gains Taxes Starting in 2018

One of the most beneficial changes in the 2017 tax reform that will help many of my clients is the decrease in the long-term capital gains taxes.  Many clients come to me because they have rental property, investment securities or own a business which lead to a complicated tax return.   The table below illustrates the changes for a married couple filing jointly.

 Capital Gain Tax Brackets Changes:

•  0% Rate: Previously for income up to $37,950.  In 2018 it goes to $77,200 in income.

• 15% Rate: Previously for income up to $153,100.  In 2018 it goes to $479,000.

• 20% Rate: Previously for income above $153,100.  In 2018 it goes to income above $479,000.

  The income amounts shown above include all sources of income such as pension, social security, IRA, and capital gains.  In previous years, many people would reach $153,000 in income from all these sources and see their capital gains taxed at a 20% tax rate. 

  Under the tax changes, very few people will now have more than $479,000 in income each year and will be able to keep their capital gains taxes at only 15%.  As you can see, a savings of 5% on your capital gains taxes will quickly add up.