Is there a new capital gains tax in 2024?
For the 2024 tax year, individual filers won't pay any capital gains tax if their total taxable income is $47,025 or less. The rate jumps to 15 percent on capital gains, if their income is $47,026 to $518,900. Above that income level the rate climbs to 20 percent.
The 2024 budget would increase the "inclusion rate" from one-half to two-thirds on capital gains above $250,000 for individuals. So for the first $250,000 in capital gains, an individual taxpayer would continue to pay tax on 50 per cent of the gain. For every dollar beyond $250,000, two-thirds would be taxable.
President Biden's $7.3 trillion FY 2025 budget released March 11, proposes several tax changes aimed at wealthier taxpayers, including a minimum tax on billionaires, a near doubling of the capital gains tax rate, and an increased Medicare tax rate.
| Tax rate | Single | Married filing jointly |
|---|---|---|
| 12% | $11,601 to $47,150 | $23,201 to $94,300 |
| 22% | $47,151 to $100,525 | $94,301 to $201,050 |
| 24% | $100,526 to $191,950 | $201,051 to $383,900 |
| 32% |
This means right now, the law doesn't allow for any exemptions based on your age. Whether you're 65 or 95, seniors must pay capital gains tax where it's due.
Capital Gains Tax for People Over 65. For individuals over 65, capital gains tax applies at 0% for long-term gains on assets held over a year and 15% for short-term gains under a year. Despite age, the IRS determines tax based on asset sale profits, with no special breaks for those 65 and older.
Specifically, beginning in 2026, the rates will be 10, 15, 25, 28, 33, 35, and 39.6 percent. A separate rate schedule specified in the tax code applies to taxable income in the form of qualified dividends and most long-term capital gains, with a maximum statutory rate of 20 percent.
The Taxpayer Relief Act of 1997 reduced capital gains tax rates to 10% and 20% and created the exclusion for one's primary residence. The Economic Growth and Tax Relief Reconciliation Act of 2001 reduced them further, to 8% and 18%, for assets held for five years or more.
The Administration's Fiscal Year 2025 Budget proposes to increase the top marginal rate from 37 percent to 39.6 percent above $400,000 (page 78), and it would apply this top marginal rate to the long-term capital gains and qualified dividends of taxpayers with taxable income of more than $1 million.
As Granite Staters begin to file their taxes, I want to share some useful tips and resources from the IRS to help folks file for little or no cost and to save money through available tax credits. The 2024 tax season begins on Monday, January 29, 2024, and the deadline to file is Monday, April 15, 2024.
What is the standard deduction for 2024 for seniors?
| Filing Status | Taxpayer Is: | Additional Standard Deduction 2024 (Per Person) |
|---|---|---|
| Single or Head of Household | Blind | $1,950 |
| Single or Head of Household | 65 or older | $1,950 |
| Single or Head of Household | Blind AND 65 or older | $3,900 |
You may be in line for a smaller tax refund this year if your income rose in 2023. Earning a lot of interest in a bank account could also lead to a smaller refund. A smaller refund isn't necessarily terrible, since it means you got paid sooner rather than loaning the IRS money for no good reason.
The IRS allows no specific tax exemptions for senior citizens, either when it comes to income or capital gains. The closest you can come is contributing to a Roth IRA or Roth 401(k) with after-tax dollars, allowing you to withdraw money without paying taxes.
- $44,625 for single and married filing separately;
- $89,250 for married filing jointly and qualifying surviving spouse; and.
- $59,750 for head of household.
The capital gains exclusion applies to your principal residence, and while you may only have one of those at a time, you may have more than one during your lifetime. There is no longer a one-time exemption—that was the old rule, but it changed in 1997.
This tax is applied to the profit, or capital gain, made from selling assets like stocks, bonds, property and precious metals. It is generally paid when your taxes are filed for the given tax year, not immediately upon selling an asset.
The seller must have owned the home and used it as their principal residence for two out of the last five years (up to the date of closing). The two years do not have to be consecutive to qualify. The seller must not have sold a home in the last two years and claimed the capital gains tax exclusion.
Capital gains taxes: These are taxes paid on the appreciation of any assets that an heir inherits through an estate. They are only levied when you sell the assets for gain, not when you inherit.
A few options to legally avoid paying capital gains tax on investment property include buying your property with a retirement account, converting the property from an investment property to a primary residence, utilizing tax harvesting, and using Section 1031 of the IRS code for deferring taxes.
You can avoid capital gains tax when you sell your primary residence by buying another house and using the 121 home sale exclusion. In addition, the 1031 like-kind exchange allows investors to defer taxes when they reinvest the proceeds from the sale of an investment property into another investment property.
Do you always get a 1099 s when you sell your house?
The primary residence exemption for filing a Form 1099-S only applies when you provide written assurances that the property sold was your main home. However, the Form 1099-S may still be issued, even if the exemption applies. It is just not required.
The TCJA set the personal exemption at zero dollars. This provision will expire on January 1, 2026. Child Tax Credit/Credit for Other Dependents (IRC § 24): On January 1, 2026, the maximum amount of the child tax credit and the additional child tax credit will be reduced from the increased amounts allowed by the TCJA.
While the lowest bracket is at a 10% tax rate for the 2023 and 2024 tax brackets and the 2017/2026 tax brackets, the other tax rates for the 2017/2026 brackets are higher. The current 12% tax rate will become 15% in 2026. And the current 22% tax rate will become 25%.
The $10,000 limitation on state and local taxes (state income taxes, real estate taxes, personal property taxes, etc.) will be removed. This limitation can be a significant benefit to taxpayers in high income tax states, such as California and New York.
| Capital gains tax rate | Single (taxable income) | Married filing jointly (taxable income) |
|---|---|---|
| 0% | Up to $47,025 | Up to $94,050 |
| 15% | $47,026 to $518,900 | $94,051 to $583,750 |
| 20% | Over $518,900 | Over $583,750 |
