Unless something changes, the demise of the Bush tax cuts in conjunction with the 3.8 percent Medicare surtax will result in the following maximum federal rates on investment gains and income recognized by individuals and trusts in 2013 and beyond. These DO NOT include State Income Taxes:
- 23.8 percent (20 percent plus 3.8 percent) on long-term capital gains (versus 15 percent for 2012).
- 43.4 percent (39.6 percent plus 3.8 percent) on short-term capital gains (versus 35 percent for 2012).
- 43.4 percent (39.6 percent plus 3.8 percent) on income from dividends, interest, rental activities, royalties, and annuities (versus 15 percent on qualified dividends for 2012 and 35 percent on these other types of income for 2012).
- 43.4 percent (39.6 percent plus 3.8 percent) on ordinary income from passive business activities and ordinary income from the business of trading in financial instruments or commodities (versus 35 percent for 2012).