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How policy changes to capital gains can help investors

Ask any tax analyst or financial advisor, and they will tell you that the key to investing is the long-term play. The longer you have your investment available, the better your return is likely to be. This may be realized in two ways; through the overall value of the investment (i.e. how much money is made through the investment’s growth), and the applicable tax rate.

Thanks to the American Taxpayer Relief Act of 2012, a number of temporary tax relief measures were made permanent. This means that the rates of certain capital gains taxes would not increase. 

The top tax rate would be 20 percent for the highest income earners. This tax would be applicable to single filers with adjusted gross incomes of $413,201.00 or more as well as married and joint filers with adjusted gross incomes of $464,858.00 or more. The 20 percent rate would be considerably better than the 39.6 percent rate for regular earnings.

Those investors with incomes below these thresholds for high earners would be subject to a 15 percent capital gains tax. This is still considerably less than the 23 or 28 percent tax rate for regular income. At the same time, some filers would not be responsible for any taxes.

This could help investors because they would not have to worry about potential tax increases, which would help in planning as well. If you have questions about how your income will fit into the respective tax brackets, and how to structure your investment to maximize its value, an experienced tax law attorney can help. 

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Law Offices of Robert T. Leonard, APC

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