Thursday, June 17, 2010

Long Term Capital Gains Tax Rates Increase in 2011 - Bargaineering

Long Term Capital Gains Tax Rates Increase in 2011 - Bargaineering

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Long Term Capital Gains Tax Rates Increase in 2011

Posted: 17 Jun 2010 04:21 AM PDT

Stock Market Floor TraderWhen people talk about the Bush-era tax cuts, they’re usually referring to the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) signed by President Bush in June of 2001. Many of the provisions were set to phase in over 9 years but those were accelerated when the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) was signed just two years later. Many of those cuts are set to expire this year, the two big items being income tax rates and capital gains rates.

President Obama has publicly said that he will let the Bush-era capital gains tax cuts expire on schedule this year, so it’s important to know how they will affect your investments.

2010 Capital Gains Tax Rates

Here’s what the rates are this tax year:

2009-2010
Tax Bracket Short Term Long Term
10% 10% 0%
15% 15% 0%
25% 25% 15%
28% 28% 15%
33% 33% 15%
35% 35% 15%

2011 Capital Gains Tax Rates

One of the changes Bush implemented was an adjustment to the tax brackets themselves. The Economic Growth and Tax Relief Reconciliation Act of 2001 introduced a 10% tax bracket and the brackets themselves were lowered. The 28% bracket was lowered to 25%, the 31% went to 28%, etc. If we assume the pre-cut brackets along with the pre-cut capital gains rates, we have the following:

2011 Onward
Tax Bracket Short Term Long Term
15% 15% 10%
28% 28% 20%
31% 31% 20%
36% 36% 20%
39.6% 39.6% 20%

It’s almost certain that taxes, especially capital gains taxes, will increase. Even though it’s June, now’s the time to start thinking about what your plans are for the upcoming months. Does it make sense to cash out some winners and save 5% on your capital gains taxes?

(Photo: artemeustra)



Long Term Capital Gains Tax Rates Increase in 2011 from personal finance blog Bargaineering.com.


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