New Tax Law Creates Planning Opportunities

May 22, 2006

Along with some temporary AMT relief, the tax law just passed last week extends the long-term capital gain tax rates to 2010. 

Folks in the 10 and 15% tax bracket will benefit the most (assuming those same folks have investments held outside of retirement accounts).  For 2006-2007, long term capital gain rates will stay at 5%.  In 2008, the long-term capital gain rate drops to 0% and will remain there through 2010.

Taxpayers in higher tax brackets will pay 15% on long-term capital gains from now through the end of 2010.  After 2010, the long term capital gain rates are expected to go back to the previous levels (10% and 20%).

This creates some planning opportunities for the next few years.  If you’ve been holding onto stocks that have a low cost basis, depending on which tax bracket you’re in, you’ve got several years to reduce those positions and enjoy a low tax bill in the process.


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Kristine McKinley, CFP®, CPA, is the founding principal of Beacon Financial Advisors, LLC, an independent, fee-only financial planning firm located in Lee’s Summit, Missouri and serving the greater Kansas City area.

Kristine focuses on providing fee-only financial planning, investment advice, and tax preparation to individuals and families from all income levels.  About Us

In the News

Investment News – Kristine McKinley discusses the 0% Social Security COLA (for 2016) in No Social Security cost-of-living adjustment in 2016.

Kiplinger Magazine/NAPFA – Kristine McKinley answered reader’s tax questions during the 2013 Jump Start Your Retirement Plan Days sponsored by Kiplinger magazine and the NAPFA Consumer Education Foundation.