Capital Gain Tax Rate Extended through 2010
On May 17, 2006 President Bush signed into law the Tax Increase Prevention
and Reconciliation Act of 2005. (The bill was initiated in Congress in 2005,
thus the year.) The bill includes many provisions, and here we look at one
of the nicer provisions.
In 2006 the tax rates on capital gains and qualified dividends is 15% for most
tax payers, but only 5% for those tax payers in the 10% and 15% tax brackets.
In 2008 that 5% rate was scheduled to go to zero - no tax for lower income
tax payers.
After 2008 all the rates increase back to rates more in line with the tax bracket
for ordinary income.
One of the provisions of TIPRA is to extend those 2008 provisions for two
additional years - through 2010. This really helps lower income tax payers
who have the discipline to invest some money.
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