Refer to Section 201 for tax-related definitions and exemptions, and see sections 204 (Long-Term Capital Gains Assessment) through 206 in the full text of the I-1600 initiative for further 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:
- Home Sales
- Farm Income
- Retirement Accounts
Exemption Calculation = $15,000 – (LTCG x 0.25) (Exemption defined in section 201 item 18)
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.
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|