2016 Capital Gains Taxes Jump from 15% to 28%-Fiction!
Summary of eRumor:
It’s been reported that capital gains taxes will go from 15% to 28% in 2016.
False reports that capital gains taxes are jumping from 15 to 28% have surfaced in each of the last three years, and 2016 is no different.
Rumor has it that capital gains taxes will jump 13% in 2016 (or whatever new tax year it happens to be) because of the Affordable Care Act’s net income surtax, but that’s simply not true.
In both 2011 and 2012, capital gains taxes were capped at 15%, a historically low level. The bipartisan American Taxpayer Relief Act of 2012 (ATRA) set capital gains tax at 20% in 2013, with top earners ($200,000/individual, $250,000 couple) facing an additional 2.3% because of the Affordable Care Act’s net income surtax. That left federal capital gains taxes at 23.3% for the nation’s top earners.
But states also levy capital gains taxes that need to be factored in. On average, state capital gains taxes were a little more than 5%. With state and federal taxes factored in, top earners paid a 28.7% capital gains tax rate in 2014. Those who were not in the top income bracket paid 25%, the Tax Foundation reports.
In 2016, capital gains tax rates will stay about the same. The Tax Foundation reports that top earners can expect to pay 28.6% in 2016 with both state and federal taxes factored in.
In conclusion, the claim that 2016 capital gains taxes are jumping from 15% to 28% in 2016 is wrong. The rate for top earners will stay the same at about 28.6%.