Selling Stocks, Bonds, Mutual Funds

If you decide to sell stocks, bonds, or even mutual funds that you already had for over a year, the proceeds will be taxed at long-term capital gains rates of 0%, 15%, and 20%. You have to compare these figures to the top 37% tax rate on ordinary income.

The 0%, 15%, and 20% rates apply to long-term capital gains and are usually based on set income thresholds that always adjust depending on inflation. For 2022, the 0% rate applies to all individuals that have a taxable income up to $41,675 on single returns, $55,800 for head-of-household filers, or $83,350 for joint returns.

The 20% rate usually starts at $459,751 for single filers and $488,501 for those who are heads of household. The 15% rate is meant for those individuals that have taxable incomes between 0% and 20% breakpoints. However, next year, the income thresholds will be much higher.

Next year, the 0% rate will apply to citizens with taxable income up to $44,625 on single returns, and $59,750 for those who are heads of household. The 20% rate will apply from $492,301 for those who are single, $523,051 for heads of household, and $553,851 for those who are filing jointly.

The 15% rate will also be for those individuals who have taxable incomes between 0% and 20% breakpoints. Those favorable rates will apply to qualified dividends.