How Tax Reform Treats Dividends and Capital Gains
Tax reform bills have passed both the House and the Senate, and a joint conference is working to try to reconcile the two measures and come up with a compromise solution that both chambers of Congress can pass. One area where the two bills largely agree is in the way investors get taxed on dividends and capital gains, but the way that the rest of the reform provisions interact with investment-related taxation could make things more complicated rather than less for taxpayers with investment income.
Under current law, investors pay preferential rates on qualified dividends and long-term capital gains. If you're in the existing 10% or 15% brackets, then you'll pay a 0% rate. Those in the 25% to 35% brackets pay a maximum of 15% on their qualified dividends and long-term capital gains, while those in the 39.6% bracket pay a 20% maximum tax on that investment income.
Image source: Getty Images.
Source: Fool.com
