The Lowdown on Capital Gains Tax Rates for 2020 and Beyond

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Selling taxable investments held for more than a year has tax implications. Long-term gains from the sale of stocks, mutual funds and other capital assets are taxed favorably at 0%, 15% or 20% compared with the top 37% tax rate on ordinary income. 

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These rates for long-term capital gains are based on set income thresholds that are adjusted annually for inflation. For 2020, the 0% rate applies to taxable income of up to $40,000 on single returns, $53,600 for head-of-household filers and $80,000 for joint filers. The 20% rate starts at $441,451 for single filers, $469,051 for heads of household and $496,601 for joint filers. The 15% rate is for taxable incomes between the 0% and 20% break points. These rates also apply to qualified dividends. Short-term gains from the sale of assets held for a year or less are taxed at ordinary income rates.



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