For an update on tax developments and a free download of the e-Supplement to this book, visit us online at www.jklasser.com.
|Tax rate brackets and preferential rates for capital gains/qualified dividends|
The 10%, 15%, 25%, 28%, 33% and 35% brackets for 2013 ordinary income reflect an inflation adjustment, and there is a new top bracket of 39.6% that applies if taxable income exceeds $400,000 for single taxpayers, $425,000 for heads of households, $450,000 for married persons filing jointly and qualifying widows/widowers, and $225,000 for married taxpayers filing separate returns (1.2).
Workers with wages and other compensation in excess of $250,000 (joint filers), $125,000 (married filing separately) or $200,000 (all others) are also subject to the new 0.9% additional Medicare tax; see below.
Qualified dividends (4.2) and long-term capital gains (5.3) may escape tax entirely under the 0% rate, or be subject to capital gain rates of 15% or 20% depending on filing status, taxable income, and how much of the taxable income consists of qualified dividends and eligible long-term gains. The new 20% capital gain rate has the same taxable income thresholds as the 39.6% ordinary income rate shown above, that is, either $450,000, $425,000, $400,000, or $225,000 depending on filing status. The 0%, 15%, and 20% rates do not apply to long-term gains subject to the 28% rate (collectibles and taxed portion of small business stock) ...