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Series 7 practice questionmediumTax Implications — Capital Gains

A married couple filing jointly has $450,000 in taxable income and $50,000 in long-term capital gains. Their long-term capital gains are most likely taxed at:

  1. A0%
  2. B15%✓ Correct answer
  3. C20%
  4. D37%
Explanation

Why B — 15%

For most taxpayers, long-term capital gains are taxed at 15%. The 0% rate applies to those in the lowest tax brackets, while the 20% rate applies to individuals with taxable income above approximately $492,300 (or $553,850 for married filing jointly). With $450,000 in taxable income, this couple falls below the 20% LTCG threshold and would pay 15% on their long-term capital gains.

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