Regarding portfolio investments, which types of income are taxed at a rate lower than the taxpayer's marginal tax rate?

Question

Josephine Dalton

Business

15 December, 10:34

Regarding portfolio investments, which types of income are taxed at a rate lower than the taxpayer's marginal tax rate?

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Answers (1)

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Hector Cohen · Answer 1

Long-term capital gains and qualified dividends

Explanation:

Long-term capital gains are made when you have held an asset for more than one year, and you sell it making a profit. Long term capital gains are taxed at 0%, 15% and 20% depending on the taxable income and filing status of the taxpayer.

Qualified dividends are dividends that the IRS classifies as qualified for tax rates that fall between 0% to 20%. Dividends that are not considered qualified by the IRS pay the same tax rate as ordinary income (ordinary dividends). For example, capital gains distributions are taxed like long term capital gains.