How 8 Types of Retirement Income Get Taxed

Stocks, Bonds and Mutual Funds

If you’re planning on supplementing your income with investments, get a pen and paper ready. When it comes to taxes on stocks, bonds, and mutual funds, there are many variables to take into account. You may find some of these rates favorable, though. Your proceeds will be taxed at long-term capital gains.

In 2020, a single filing individual with less than $40,001 taxable income, or married couples who decide to file jointly with a $80,001 or less taxable income won’t have to worry about taxes.

But the rates do go up. Expect 15% if you’re single with a taxable income between $40,001 and $441,450. Married couples will see the same rate if their taxable income is between $80,001 and $496,600. Once you exceed these amounts, in both instances, the rates will go up to 20%.

Net investment income also has a 3.8% surtax, so keep this in mind if you’re single with a gross income over $200,000 or married and filing jointly with modified AGIs higher than $250,000. Keep in mind, this 3.8% surtax will be due on the smaller net investments.

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