The Tax Cuts and Jobs Act of 2017 (TCJA) did not make any major changes for the taxation of gains and losses from securities transactions. Favorable tax rates continue to apply to capital gains, and losses continue to be used as offsets to capital gains and a limited amount of ordinary income. But there are numerous changes made by the TCJA that affect the taxation of securities investors, some directly and some indirectly. Here is a roundup of these changes.

Tax Rates on Capital Gains

The TCJA did not change the rates on long-term capital gains and qualified dividends. The rates remain at zero, 15 percent or 20 percent, depending on the individual’s taxable income (which does not align with tax brackets). The zero rate applies for taxable income below a set amount; the 20 percent rate applies for taxable income over a threshold amount. For 2018, the breakpoints are:

  • Married filing jointly and surviving spouses: Zero rate for taxable income not exceeding $77,200; 20 percent for taxable income over $479,000.
  • Heads of households: Zero rate for taxable income not exceeding $51,700; 20 percent for taxable income over $452,400.
  • Singles: Zero rate for taxable income not exceeding $38,600; 20 percent for taxable income over $425,800.
  • Married filing separately: Zero rate for taxable income not exceeding $38,600; 20 percent for taxable income over $248,500.