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0% Long Term Capital Gains Tax!
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Starting next year, until 2010, if you are in the 10% or 15% marginal income tax bracket, your tax on long term gains falls from 5% to 0%. Everyone else, that is the 25% to 35% tax brackets, still pays the same 15% capital gains rate. In 2011, everything reverts back to how they were before 2003, that is 10% for the 10%/15% brackets and 20% for the 25%-35% brackets. Think of it as four year long (because you can start the long term clock now) Roth IRA if you qualify. Team this up with $4.95 trades at TradeKing and you’ll practically have no expenses whatsoever.
Unfortunately if you’re single and in the 10% to 15% brackets, your income is under $31,850 (2007, it’ll be higher in subsequent years), of which you pay approximately $5,560 each year in taxes (if you made $31,850 on the dot), so with a take home pay of at most $26,290 and the cost of living in most areas, you’re probably not thinking of investing much anyway… but every bit helps!
Source: USA Today
{ 2 comments, please add your thoughts now! }Related Posts
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Not quite a 4 yr Roth IRA: a Roth IRA will allow tax free interest income. Not so here.
This is a great way for students who work part time to boost their retirement savings if they’ve already maxed out their Roth IRAs. But I guess most people who are working part time while studying are trying to cover their expenses and don’t see retirement savings as a priority. If only they were part of the personal finance community…