For years, the federal tax rate on long-term capital gains has been capped at 15%.
This year, the top rate for high-income taxpayers has been set at 20% while the 3.8% Medicare surtax on net investment income has taken effect. There are also renewed phase-outs of personal exemptions and some itemized deductions. “Altogether, some clients could have effective tax rates around 25% on their long-term gains,” says Dean Barber, head of a wealth management firm in Lenexa, Kan.
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