Your capital gains tax rate will be figured out depending on the holding period and the type of investment asset. You will be taxed federally on your capital gains and may also be subject to being taxed by your state as well. You will be taxed much higher on short term than long term.
This schedule displays the current long term and short term Federal capital gains tax rates:
Beginning in 2008 you will see a change if you are in the 10% or 15% tax bracket. To qualify for this new tax break your income must be below $32,550.00 if you are filing single and less than $65,100.00 if you are married. The new tax rate will be zero for long term capital gains and short term capital gains.
Long term capital gains are taxed at a lower rate than what your regular income will be taxed at. Depending on your income for that tax year you may be pushed in to a higher tax bracket if you received capital gains. This could result in a combination of rates for your income and capital gains. To learn more about capital gains tax visit TurboTax Online.
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