Juan will pay a 15% tax rate on his investment income resulting in a tax of $1,500.
What rate is payable on the investment income?
Investment income refers to the earnings generated from investments in assets such as stocks, bonds, real estate etc.
Juan will pay a 15% tax rate on his investment income because capital gains tax rates for a single taxpayer are typically lower than ordinary income tax rates and in this case, the rate is 35%.
To calculate the tax on his $10,000 capital gains, we multiply it by the capital gains tax rate which is
= capital gains * capital gains tax rate
= $10,000 * 15%
= $1,500 in tax on his investment income.
Therefore, Juan will pay a 15% tax rate on his investment income.
The complete question is:
Juan is a single taxpayer he earn 45,000 in ordinary taxable income this year and has $10,000 in capital gains on an investment he held for six months. what rate will one pay on his investment income? Assume 35% tax for single taxpayer