Investment Tax Tally Taxpayers who are thinking about selling appreciated investments could benefit by planning ahead and using certain strategies that may help minimize their overall tax burdens. Timing asset sales to split gains over two or more tax years, or selling losing investments to offset gains, may help keep your income from crossing critical thresholds. With property or business interests that are generally sold in a single transaction, it might be advantageous to arrange an installment sale in which the seller receives smaller payments over a period of years. Married couples who sell a principal residence (one they have lived in for at least two of the last five years) can typically exclude up to $500,000 in gains from their taxable incomes. Consider making charitable donations with appreciated assets such as shares of stock instead of cash. Within certain limits, donors could avoid capital gains taxes and take a deduction that may help lower their taxable incomes. *The 3.8% net investment income tax (also called the unearned income Medicare contribution tax) applies to the lesser of (a) net investment income or (b) the amount by which modified AGI exceeds the thresholds. The tax does not apply to municipal bond interest or IRA withdrawals. Short-term capital gains on investments held 12 months or less are taxed as ordinary income, so investors in the top 37% tax bracket could owe up to 40.8% on short-term gains. Source: Internal Revenue Service, 2022 (table shows 2023 AGI thresholds) Married Single filer filing jointly Married filing separately Head of household Tax rate Long-term capital gains & dividend tax (2023 taxable income thresholds) Up to $44,625 Up to $89,250 Up to $44,625 Up to $59,750 0% $44,626 up to $492,300 $89,251 up to $553,850 $44,626 up to $276,900 $59,751 up to $523,050 15% More than $492,300 More than $553,850 More than $276,900 More than $523,050 20% Net investment income tax (modified AGI thresholds) Over $200,000 Over $250,000 Over $125,000 Over $200,000 3.8%*
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