Are you receiving dividends or considering selling long-term business assets? The new Tax Cuts and Jobs Act (TCJA) keeps the same tax rates for long-term capital gains and dividends but no longer ties them to individual income tax brackets (1).
Previously, no tax was paid on gains or dividends in the 10 to 15% ordinary-income bracket. An income tax rate of 15% applied to 25%, 28%, 33% or 35% ordinary-income brackets. A maximum rate of 20% applied to the 39.6% ordinary-income bracket. High-income earners added the 3.8% net investment income tax (NIIT), paying 18.8% (15% + 3.8% NIIT) or 23.8% (20% + 3.8% NIIT).Going forward the TCJA continues with the same rates, but not tied to the ordinary-income brackets. The NITT continues to apply and the new brackets are indexed to inflation:
| Tax Rates | Single | Married Joint Filers | Head of Household |
| 0% | $0 – $38,600 | $0 – $77,200 | $0 – $51,700 |
| 15% | $38,601 – $425,800 | $77,201 – $479,000 | $51,701 – $452,400 |
| 20% | $425,801 and up | $479,001 and up | $452,401 and up |
The rates for trusts and estates that collect long-term capital gains and qualified dividends are 0% up to $2,600, 15% between $2,601 and $12,700, and 20% above $12,701. These rates also apply to the “kiddie tax”, potentially until the age 24.
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1) Hradsky, Christine. Capital Gains Rates Before and After the New Tax Law from the Ryan + Wetmore Website, April 24, 2018.