Currently I am in a 25% Tax Bracket and I plan to sell stock and will incurr a capital gain of $200,000. Will this affect my marginal tax bracket? I know I will pay capital gains taxes on the $200,000 but will the $200,000 be added to my AGI and affect my marginal bracket? (i.e. bump me up into the 33% bracket)

  • How long have you had the stock? – JTP - Apologise to Monica Mar 19 '13 at 17:44
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    Why does it matter whether it "affects your marginal tax bracket"? – user102008 Mar 19 '13 at 22:44
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    He's asking to understand what the tax impact will be. If it's a long term gain, 15% is $30K, but ordinary income might push him up to 33%, as much as $66K in tax. Wouldn't you want to know? – JTP - Apologise to Monica Mar 20 '13 at 12:18

It will definitely be added to your AGI, but not necessarily bump your ordinary income tax bracket.

You will have to use the Capital Gains Computation worksheet (that uses the general Tax Computation Worksheet) to figure out your tax liability. You might also be subject to the AMT. See the instructions to form 1040, line 44 (page 38) and line 45.

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