Capital Gains Taxes?

[berkshire101]

Just curious, are capital gains taxed only at the federal level?

 

This chart:  http://www.schwab.com/public/schwab/nn/articles/Taxes-Whats-New

 

shows that if you're in the $37,450 to $90,750 income bracket then the tax rate is at 25% for short-term capital gains.  Are there any capital gains at the state level too?  I live in California by the way. 

 

I know that long-term capital gains are taxed at 15%.  It's reduced to 5% for individuals in the lwoest two income brackets.  Thanks!

[gfp]

California taxes capital gains the same as ordinary income.  Some states don't have a capital gains tax.  The system in California is progressive and starts at 1% and goes all the way to 12.3%.  It might be the worst state for capital gains taxes but I don't know for sure.

[berkshire101]

Okay thanks.

 

This site:  http://www.bankrate.com/finance/taxes/state-taxes-california.aspx

 

has it where if your income is between $50,870 and $259,844 then the state tax rate is 9.3%.  So I'm guessing you're paying 25% for federal and 9.3% for state, making it a 34.3% tax rate for short-term capital gain.  Ouch, that sucks.

[rmitz]

Just curious, are capital gains taxed only at the federal level?

 

This chart:  http://www.schwab.com/public/schwab/nn/articles/Taxes-Whats-New

 

shows that if you're in the $37,450 to $90,750 income bracket then the tax rate is at 25% for short-term capital gains.  Are there any capital gains at the state level too?  I live in California by the way. 

 

I know that long-term capital gains are taxed at 15%.  It's reduced to 5% for individuals in the lwoest two income brackets.  Thanks!

 

Actually, long term gains are reduced to 0% for individuals in the lowest two income brackets.  15% for most and then 20% at the highest income bracket.  Plus the 3.8% surtax if you’re over 200k (or 250k if married).

 

States usually tax capital gains of any type as ordinary income, but that can vary.  I’m not aware of local taxes that tax capital gains but I’m sure that must happen somewhere. 

 

You can’t just add the local + federal tax rates though, because the local/state taxes become a deduction on your federal taxes.

[DavidVY]

This is why I always have a small-medium sized margin account on my taxable brokerage stocks that I never plan on selling. (CA based here)

 

You can deduct up to 3k of losses from your income.

 

I do some short-term profit from trading that the margin interest will offset.

 

This is also good if you have large unrealized gains (LEAPS) coming up.

 

I give credit to Ericopoly for his more thorough dicussion of this topic

[orthopa]

This is why I always have a small-medium sized margin account on my taxable brokerage stocks that I never plan on selling. (CA based here)

 

You can deduct up to 3k of losses from your income.

 

I do some short-term profit from trading that the margin interest will offset.

 

This is also good if you have large unrealized gains (LEAPS) coming up.

 

I give credit to Ericopoly for his more thorough dicussion of this topic

 

Do you have the link to the thread this was discussed in?

[leeway]

another complexity on capital gain treatment at the state level is that some states don't allow capital loss carry forward. I used to live in NJ and I tried to avoid taking more than 3K capital loss in the years that I would like to take some capital loss.

[rkbabang]

There are 9 states with no state capital gains taxes (just one of the reasons I moved to NH).

 

Alaska

Florida

Nevada

New Hampshire

South Dakota

Tennessee

Texas

Washington

Wyoming

 

http://www.fool.com/personal-finance/taxes/2014/10/04/the-states-with-the-highest-capital-gains-tax-rate.aspx

 

http://g.foolcdn.com/editorial/images/146424/states-highest-capital-gains-tax-rate_large.PNG

 

[pricingpower]

Would note at least currently the state income tax gets deductible from federal, at top tax brackets this dampens their marginal impact, one can't just add federal state and local, that overstates. Limitations on deductions make the exact impact not super transparent though

[scorpioncapital]

Yeah, the bottom line with taxes is real world experience in your case. This is very common. State 1 has lower income taxes and makes it up on a host of other taxes including higher cost of living. State 2 has higher income tax but lower taxes elsewhere. Then there are states like California that have high everything :)