Nor can you lose sight of the negative impact that capital gains taxes have on your clients’ wealth creation. Although the top federal capital gains tax rate is 20%, all states also charge taxes on capital gains. The average capital gains tax rate for all states is over 28% with California residents paying 33% and nine states with the lowest at 25%.
But, here’s the tax impact kicker. Rates of return on stocks of all types historically are much higher than fixed income. So, while the tax rates may be lower than marginal income tax rates and gains are realized only every few years, the reinvestment of the tax savings is higher. For this reason, you will often see the benefits of tax alpha highest for equity investments.
Video Library
- MyTAP AAVUL Full Webinar (23:58)
- Insurance Like it Should Be (1:07)
- Market Decline Anxiety (0:54)
- Avoiding All Wealth Losses (0:54)
- Tax Impact on Portfolios (1:01)
- Impact of Capital Gains (0:46)
- Tax Aware Investing (0:41)
- Conventional Tax Alpha Tactics (1:37)
- Tax Alpha in One Step (1:57)
- AAVUL Tax Shield Primer (3:41)