Capital Gains Tax Changes

When the topic of capital gains tax changes comes up, I often hear people asking, "What does this mean for me?" It's a fair question, as the tax code can be complex and confusing. In this article, I'll try to break down the changes in a way that's easy to understand.
What are capital gains taxes?
Capital gains taxes are taxes on the profit you make when you sell an asset, such as a stock, bond, or real estate. The amount of tax you owe depends on how long you've held the asset and your income.
What are the changes to capital gains taxes?
The changes to capital gains taxes are part of the Tax Cuts and Jobs Act, which was signed into law in December 2017. The changes affect both individuals and businesses.
For individuals, the top capital gains tax rate has been reduced from 20% to 15%. This means that if you sell an asset and make a profit, you'll pay less in taxes.
For businesses, the capital gains tax rate has been reduced from 35% to 21%. This means that businesses will pay less in taxes on the profits they make from selling assets.
What do the changes mean for me?
The changes to capital gains taxes could mean a tax savings for you, depending on your individual situation. If you're planning to sell an asset, it's important to talk to a tax advisor to see how the changes will affect you.
Here are some additional things to keep in mind:

The changes to capital gains taxes are not retroactive. This means that they only apply to assets that you sell after December 31, 2017.
The changes to capital gains taxes do not affect the way that you calculate your cost basis. Your cost basis is the amount you paid for the asset, plus any improvements you've made to it.
The changes to capital gains taxes do not affect the way that you calculate your holding period. Your holding period is the amount of time you've owned the asset.

I hope this article has helped you understand the changes to capital gains taxes. If you have any questions, please don't hesitate to ask a tax advisor.