Final answer:
The maximum tax rate on long-term capital gains on collectibles held for more than one year is 28%. This rate is specific to collectibles and is separate from the tax rates for other types of long-term capital gains or ordinary income.
Step-by-step explanation:
The maximum tax rate on long-term capital gains on collectibles, such as art, antiques, stamps, and coins, that are held for more than one year is 28%. This is in contrast to the lower tax rates that apply to most other long-term capital gains, which are typically taxed at 0%, 15%, or 20% depending on the taxpayer's taxable income. The higher rate for collectibles reflects the understanding that these items are often luxury goods and represents an effort to ensure that the tax system captures revenue from the gains on these valuable assets.
In a broader context, it's important to note that the federal income tax system is progressive, meaning as income increases, so does the tax rate up to a certain point. For ordinary income, the maximum rate after the passage of the Tax Cuts and Jobs Act of 2017 is 37%. However, for long-term gains on collectibles, the maximum rate is specifically set at 28%.