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Tax Changes and Your Investments

The new tax law has a number of changes that affect individual and business gaveltaxpayers, but in the end, the tax treatment of investments was hardly touched.


One big change is how the long-term capital gains tax rate is determined. Previously, this rate was based on income tax brackets. Starting in 2018, long-term capital gains – profits on the sale of assets held for more than one year – will be taxed according to taxable income levels, but at the same rates as before.

Joint tax filers with a taxable income of less than $77,200 pays 0% on realized long-term capital gains. The same couple pays 15% on long-term gains between the 0% limit and $479,000, and gains over this amount are taxed at 20%.


Income from investing in Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) accounts will be taxed differently. Investment income of over $2,100 in the name of a child (younger than 19 or, if a full-time student, 24) was previously taxed at the parents’ tax rate. Now, it will be taxed at the trusts and estate tax rate.


If you contribute to a 529 plan, you can use up to $10,000 annually for qualified primary and secondary education costs. Previously, the plan was strictly a college investing vehicle. Also, tax-deferred, like-kind exchanges of tangible assets are no longer allowed, except for real estate.


Congress considered a handful of other moves that would have affected individual and retirement investors, but most other tax breaks were eventually left alone. This includes the tax-deferred status of contributions to qualified retirement plans and the allowable amounts that qualify for favorable tax treatment. Talk to us to learn more.

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