Investment Profit Contribution

Refer to Section 301-306 for tax-related definitions and exemptions, in the full text of the the bill for more details.

Also see IRS topic for more info on Capital Gains.

After an exemption (see below), an 8.5% tax contribution will be assessed on Net Long-Term Capital Gains (LTCG), if the LTCG is over $15,000 (Section 203).

The tax will not apply to:

  • Residential or Home Sales
  • Agriculture Income
  • Retirement Accounts

Exemption Calculation = $15,000 – (LTCG x 0.25) (Exemption defined in section 301)

The exemption does not come into play for any LTCG above $60,000.

If the LTCG is $15,000 or less, the tax is not applied at all.

The Investment Profit Contribution will be assessed annually and submitted with the tax return.

Example

Mary is reporting a Net Capital Gains of $45,000 after selling stocks.

  • First, calculate the exemption: $45,000 x 0.25 = $11,250.
  • $15,000 – $11,250 = $3750 is the exemption amount.
  • $45,000 – $3750 = $41,250 is the non-exempt, taxable amount.
  • $41,250 x 8.5% = $3506.26

Mary would contribute $3506.26

More examples for illustration:

Long Term Capital Gains Contribution
$20,000 $850
$40,000 $2975
$60,000 $5100
$80,000 $6800
$100,000 $8500