If you have certain dividends that qualify, or if you have capital gains on investments you've held for longer than a year, then you can get a lower tax rate on that portion of your income. The brackets below tell you the rate for 2021.
|
Tax Rate on Income |
Single |
Married Filing Jointly |
Head of Household |
Married Filing Separately |
|
0% |
Up to $40,400 |
Up to $80,800 |
Up to $54,100 |
Up to $40,400 |
|
15% |
$40,400 to $445,850 |
$80,800 to $501,600 |
$54,100 to $473,750 |
$40,400 to $250,800 |
|
20% |
Above $445,850 |
Above $501,600 |
Above $473,750 |
Above $250,800 |
DATA SOURCE: IRS.
Dividends on most U.S. stocks qualify, but payouts on certain investments like real estate investment trusts don't. If you sell an investment after holding it for a year or less, then your regular rate will apply.