CAPITAL GAIN TAX INCREASES COMING

Look out ahead, folks! The combination of two upcoming changes to federal capital gain taxes will have a tremendous impact on those of us who own land, invest in real estate, own stocks or mutual funds, or receive other types of investment income.

Beginning January 1, 2011, the tax cuts instituted during the Bush presidency will expire. As that relates to capital gain rates, the result will be an increase from the current 15% to 20%. (A 33% increase!) In addition, there is a small provision within the thousands of pages of legislation of the new Health Care bill that President Obama signed into law on March 23, 2010, that also impacts federal capital gain taxes. The bill includes a 3.8% "Medicare payroll tax" on capital gains and other investments. The 3.8% increase takes effect on January 1, 2013. It does have some income threshold requirements; i.e., your income must be over a certain level for it to apply to you. Added together, these two changes will result in a federal capital gain tax rate of 23.8% for many Americans, nearly a 60% increase over today's 15% rate!

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