![]() (If she did, it would be more complicated to figure out which bracket she falls into.) Given her $350,000 of gains, she would fall into the income group between $40,400 and $445,800, resulting in a long-term federal capital gains tax rate of 15%. To simplify this example, let’s assume further that she doesn’t earn any other income. (She paid for 7,000 shares at $50 each, for a total of $350,000, and then sold them for $100 each, for a total of $700,000. Jenna realized a capital gain of $350,000. Jenna held the stock for more than one year, so her realized income is considered long-term capital gain. She decides to sell her shares in January 2024 at a price of $100 each. Let’s consider Jenna, a Colorado investor who purchased 7,000 shares of Apple stock in April 2019 at $50 per share. So, what would these numbers look like in the real world? What Is The Colorado Capital Gains Tax?Ĭolorado taxes capital gains as income at a flat rate of 4.55%, so no matter the amount of taxable ordinary income, the state tax rate will always be 4.55%. In addition, some categories of capital assets fall entirely outside of this rubric: gains on collectibles such as art, jewelry, antiques, and stamp collections are taxed up to a maximum 28% rate. Long Term Federal Capital Gains Tax Rates for 2024 Here, too, the precise rate depends on the individual’s income and marital status: Taxable income (Single Filers) Long-term capital gains, meanwhile, are taxed at a lower rate than ordinary income. Short Term Federal Capital Gains Tax Rates for 2024 The short-term capital gains schedule matches the schedule for ordinary income, and your marginal and effective rates depend on your income and marital status, as shown below: Taxable income (Single Filers) Short- and long-term capital gains are taxed differently assets held for one year or less are treated as ordinary income, while longer-held assets are taxed at lower rates. Talk to Us What Is The Federal Capital Gains Tax (2024)? Let’s look at how federal and state governments tax capital gains. The tax rate you will pay on capital gains will vary depending on where you live, your income, and the type of asset you sold but the federal and state tax systems are generally progressive, so individuals with higher incomes face a higher capital gains tax rate. Realized capital gains are typically subject to both federal and state taxes. Of course, once you do sell the stock, you will face federal and state capital gains taxes. ![]() Generally, at the federal level, long-term capital gains receive more favorable tax treatment than short-term gains.Ĭapital gains are not taxed until they are realized, meaning that even if your Apple stock has increased 50x from the day you invested, you won’t owe any capital gains taxes until you sell the stock. ![]() Long-term capital gains: These are gains from selling assets that you’ve held for more than one year.At the federal level, short-term capital gains are typically taxed at the same (high) rate as ordinary income. Short-term capital gains: These are gains from selling assets that you’ve held for one year or less.There are two types of realized capital gains for taxation purposes: Critically for our purposes, in most cases you will not pay taxes until you cash out or “realize” the gains. For instance, if you hold stock that increases in value, but you haven’t sold it yet, that is considered an unrealized capital gain. Unrealized gains, by contrast, represent a change in the value of an investment that you have not yet sold. “Realized” in this context means “acquired” or “received,” so realized capital gains are gains that you have captured by selling the asset. Capital assets can include stocks, real estate, or even an item purchased for personal use like a car or a boat – in short, any significant property that could gain or lose value over time.Ĭapital gains can be realized or unrealized. So let’s dive in! What Are Capital Gains?Ĭapital gains are a capital asset’s increase in value from the value at which it was purchased. Reduce your taxable income with charitable deduction tax strategies such as Charitable Lead Annuity Trusts and Conservation Easements.Buy renewable energy projects that make you eligible for significant government tax incentives that lower your capital gains tax bill.Sell appreciated assets in a tax-exempt trust through Charitable Remainder Trusts.We’ll also show you different tax planning strategies that can significantly reduce your state capital gains tax: ![]() In this article, we’ll explain what capital gains are, how they are taxed in Colorado. But how much? It’s important to understand your capital taxes and how they will impact your financial future, not least because that knowledge will empower you to take action to reduce your tax bill today. If you have cashed out capital gains in Colorado, you know you’ll lose something to taxes.
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