I'm always amazed each tax season that people don't really know how the profits and losses from stock sales (capital gains) are taxed at the federal level, much less the state level.  Depending on your income, they can be taxed at three different rates: 0%, 15%, or 20%.

Each year the IRS also unveils the new income tax thresholds that determine each rate. reflecting adjustments for inflation. Here are the new limits for 2025, (which will apply to tax returns you'll normally file in 2026) could have significant implications for taxpayers, particularly those with investment income.

So, let's break down the new numbers and compare them to the 2024 thresholds.

For 2025, the long-term capital gains tax rates (for assets held for one year and a day or more) remain at 0%, 15%, and 20%, but when you qualify for them has changed.

One of the subjects that politicians and the main street media love to push is that the rich don't pay their fair share of taxes.  But is that really true?  I thought I would give you some real statistics and let you decide.  Here is the latest data available from the IRS for 2021, in which the tax burden on high-incomers rose:

The top 1% of individual filers paid 45.78% of all U.S. federal income taxes, although they created only 26.3% of the total adjusted income.  These are people that had an AGI of more than $682,577.

The highest 5% paid 65.64% of total income tax, while the only created 41.99% of the total adjusted income and had an AGI of more than $252,840 or more.

The IRS tax brackets are probably the misunderstood part of the tax code.  Most people think that all of their income is taxed at the highest percentage that their income throws them into.  This is not true.  The income tax system in the United States is a progressive tax system. That means that different parts of your income is taxed at different rates.

One of the questions I often get is how will it affect my taxes if I take this much taxable income from a retirement account?  Or how much in taxes will it cost me if I bring in this extra income?  That is where understanding the tax tables come into play.  It all starts with your filing status, because the first thing you have to do is figure out your taxable income.