Investment Income & Tax Treatment

 

Tax Treatment on Dividend

 

1. Qualified dividend income tax rate for assets held for > 60 days
1. 15% for those in ≥ 25% income tax bracket
2. 0% for those in < 25% income tax bracket
2. Otherwise, taxed @ordinary income tax rate 

Tax Treatment on K Gains

 

1. K-Gains from ST Investment taxed at ordinary income 10% < t < 35%
2. K-Gains from LT Investment taxed at
1. 0% for  10% < t ≤ 25% income bracket
2. 15% for t > 25% income bracket

 

 

Ordinary Income Rate	Long-term Capital Gain Rate	Short-term Capital Gain Rate	Long-term Gain on Real Estate*	Long-term Gain on Collectibles	Long-term Gain on Certain Small Business Stock
10%	0%	10%	10%	10%	10%
15%	0%	15%	15%	15%	15%
25%	15%	25%	25%	25%	25%
28%	15%	28%	25%	28%	28%
33%	15%	33%	25%	28%	28%
35%	15%	35%	25%	28%	28%

* Capital gains up to $250,000 ($500,000 if filed jointly) on real estate used as primary residence are exempt.

 

Breakdown of Income and Income Taxes Paid by Category[44]
Income Category	2008 AGI	Percentage of All Income	Percentage of Income Tax Paid
Top 1%	Over $380,345	20%	38%
Top 5%	Over $159,619	35%	59%
Top 10%	Over $113,799	46%	70%
Top 25%	Over $67,280	67%	86%
Top 50%	Over $33,048	87%	97%
Bottom 50%	Under $33,048	13%	3%

 

 

Distribution of U.S. federal taxes for 2000 as a percentage of income among the family income quintiles.

Year 2011 income brackets and tax rates

Marginal Tax Rate[7]	Single	Married Filing Jointly or Qualified Widow(er)	Married Filing Separately	Head of Household
10%	$0 – $8,500	$0 – $17,000	$0 – $8,500	$0 – $12,150
15%	$8,501 – $34,500	$17,001 – $69,000	$8,501 – $34,500	$12,150 – $46,250
25%	$34,501 – $83,600	$69,001 – $139,350	$34,501 – $69,675	$46,250 – $119,400
28%	$83,601 – $174,400	$139,351 – $212,300	$69,675 – $106,150	$119,401 – $193,350
33%	$174,401 – $379,150	$212,301 – $379,150	$106,151 – $189,575	$193,350 - $379,150
35%	$379,151+	$379,651+	$189,576+	$379,151+

  

Partial History of U.S. Federal Marginal Income Tax Rates Since 1913
Applicable Year	Income brackets	First bracket	Top bracket	Source
1913-1915	-	1%	7%	IRS
1916	-	2%	15%	IRS
1917	-	2%	67%	IRS
1918	-	6%	77%	IRS
1919-1920	-	4%	73%	IRS
1921	-	4%	73%	IRS
1922	-	4%	56%	IRS
1923	-	3%	56%	IRS
1924	-	1.5%	46%	IRS
1925-1928	-	1.5%	25%	IRS
1929	-	0.375%	24%	IRS
1930-1931	-	1.125%	25%	IRS
1932-1933	-	4%	63%	IRS
1934-1935	-	4%	63%	IRS
1936-1939	-	4%	79%	IRS
1940	-	4.4%	81.1%	IRS
1941	-	10%	81%	IRS
1942-1943	-	19%	88%	IRS
1944-1945	-	23%	94%	IRS
1946-1947	-	19%	86.45%	IRS
1948-1949	-	16.6%	82.13%	IRS
1950	-	17.4%	84.36%	IRS
1951	-	20.4%	91%	IRS
1952-1953	-	22.2%	92%	IRS
1954-1963	-	20%	91%	IRS
1964	-	16%	77%	IRS
1965-1967	-	14%	70%	IRS
1968	-	14%	75.25%	IRS
1969	-	14%	77%	IRS
1970	-	14%	71.75%	IRS
1971-1981	15 brackets	14%	70%	IRS
1982-1986	12 brackets	12%	50%	IRS
1987	5 brackets	11%	38.5%	IRS
1988-1990	3 brackets	15%	28%	IRS
1991-1992	3 brackets	15%	31%	IRS
1993-2000	5 brackets	15%	39.6%	IRS
2001	5 brackets	15%	39.1%	IRS
2002	6 brackets	10%	38.6%	IRS
2003-2011	6 brackets	10%	35%	Tax Foundation

 

Total tax revenue (not adjusted for inflation) for the U.S. Federal government from 1980 to 2009 compared to the amount of revenue coming from individual income taxes.

 

 

 Effective income tax rate in 2008 as function of taxable income.

The two most common filing statuses are shown: single (black curve) and married filing jointly (red curve).

The dashed green line represents the maximum tax rate.