Quote:
Originally Posted by daniel200
Absolutely correct. If you purchase a bond with a maturity greater than 1 year, the gains are taxed as long term capital gains at bond maturity. Any interest is taxed as ordinary income. So buying a zero coupon bond effectively transfers interest to capital gains. Call any tax planner if you want to verify.
This is the updated 2023 long term capital gains brackets from the IRS:
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You Post No. 7 implied that the first $41,675 of long term capital gains had no tax. However, the rule is that if a single person's income (including ordinary income and capital gain income) is less than $41,675, then there is no capital gains tax on long term capital gains. But, if the person has other income, such as a pension, exceeding $41,674, then their capital gains tax rate would be 15 percent or higher, depending on their income.