Short Term Cap Gains Rate

Yes. Short-term capital gain is treated the same as wages or any other ordinary income. All the ordinary income is added together and the tax is calculated on the total. If your other income puts you in the 12% bracket, the tax rate on the short-term capital gain will be 12% as long as your total taxable income, including the capital gain, does not go above the top of the 12% bracket. Taxable income is your adjusted gross income minus deductions.

The top of the 12% bracket depends on your filing status. For 2020 it is $40,125 for single or married filing separately, $53,700 for head of household, and $80,250 for married filing jointly or qualifying widow(er).

Bob Sandler

Tks Bob. One thing then, the 28% is the highest it can be used even if income is in the 37% bracket

bw

No. Short-term capital gains are treated the same as wages or any other ordinary income. If you are in the 37% tax bracket, any additional short-term capital gains will be taxed at 37%.

I think you're confused about "28% rate gain." That's a special rule that applies to LONG-term gain, not short-term, and only for certain types of assets - specifically collectibles and qualified small business stock.

Bob Sandler

Tks again Bob. Clearer now.

bw