filers, $400,000 for unmarried taxpayers other than head of household and surviving spouse filers, and $225,000 for married taxpayers filling separately. All threshold amounts are subject to an inflation adjustment. b.
Tax on Capital Gain. (1)
Individuals pay income tax on the net total of all their capital
gains. (2) Short-term capital gains are taxed at a higher rate: the ordinary income tax rate. The tax rate for individuals on "long-term capital gains", which are gains on assets that have been held for over one year before being sold, is lower than the ordinary income tax rate, and in some tax brackets there is no tax due on such gains. (3) The tax rate on long-term gains capital gains rate on net capital gains is 20%, if the taxpayer is in the 39.6% income tax bracket; 15% if the taxpayer is in the 25-, 28- 33- or 35% tax bracket, and 0 if the taxpayer is in the 10 15% tax bracket. c.
Tax on “Net Investment Income” of Individuals.
(1) Individual taxpayers are subject to a “net investment income tax” (“NIIT”), also known as the unearned income Medicare contribution (UIMC) tax. (a) For each tax year, the tax is equal to 3.8% of the lesser of: (i) net investment income for the tax year; or (ii) the excess (if any) of: modified adjusted gross income (MAGI, defined below) for the tax year, over the “threshold amount.” (b) The “threshold amount” which is: (i) $250,000 for joint returns and surviving spouses, (ii) $125,000 for separate returns, and (iii) $200,000 for all other individuals. (c) For this purpose, “MAGI” means adjusted gross income (AGI), increased by the excess of: (i) the amount of income excluded under the foreign earned income exclusion over (ii) the amount of any deductions (taken into account in computing AGI) or exclusions with respect to the excluded income in (I) that are disallowed under Code Sec. 911(d)(6). (2) For purposes of the 3.8% net investment income tax (“NIIT”), “net investment income” (NII) is the excess, if any, of: (a)
the sum of:
(I) gross income from interest, dividends, annuities, royalties, and rents collectively, “Sec.1411(c)(1)(A)(I) income”—
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