Capital gains and dividend rates

2018 Capital gains and dividend rates

Capital gains tax rates and qualified dividend rates remain the same but were adjusted to account for the tax rate modifications. The NIIT was not changed.

Long-term capital gains are taxed at capital gains tax rates. Short-term capital gains are taxed at ordinary income tax rates. The capital gains tax rates remain the same, but the capital gains rate tables were adjusted to account for the changes in the income tax rates. 

Capital gains taxes on the sale of a home remain intact under the Tax Cuts and Jobs Act. If you file Single, you can exclude up to $250,000 of profits on your home as long as it was your primary residence for at least two of the past five years. Married couples filing jointly can exclude up to $500,000.

 

The qualified dividend rate tables have similar modifications but also modified income thresholds. For example, the 0 percent qualified dividend rate applies when taxable income for individuals who are married and filing jointly does not exceed $77,200 ($38,600 in the case of single taxpayers). Similar modifications apply to the 15 percent and 20 percent qualified dividend rates.

It is important to note that the 3.8 percent net investment income tax (NIIT) was not modified by the TCJA. Taxpayers who have net investment income and whose modified adjusted gross income (AGI) exceeds the applicable threshold amount will be liable for the NIIT. Net investment income includes interest, dividends, and capital gains. For 2018 the applicable adjusted gross income thresholds are as follows.