Quote:
Originally Posted by manaboutown
Top Federal rate is now 37% + 3.8% NIIT = 41.8%. That ain't chicken feed. Moreover a substantial percentage of people pay no income tax whatsoever.
" In total, about 59.9 percent of U.S. households paid income tax in 2022. The remaining 40.1 percent of households paid no individual income tax. In that same year, about 47.1 percent of U.S. households with an income between 40,000 and 50,000 U.S. dollars paid no individual income taxes."
From: Households paying no income tax by income level U.S. 2022 | Statista |
It is not 37% on all your income, though, only the portion of your income over $693,750 for couples or over $578,125 for singles. And if your income is coming from qualified dividends, the top rate is 15% for that income unless you make over $553,851 for couples, or $492,301 for singles. Above that, your qualified dividends are still only taxed at 20% plus the aforementioned NIIT of 3.8% on the investment income for couples over $250,000. I just think it’s misleading to throw 41.8% out there, no one is actually paying that much across all their income.