The Tax Bill Hiding Inside a “Winning” Trade
Selling a stock, a rental property, or a stake in a business at a profit feels like the finish line. But the number on your brokerage statement — the pre-tax gain — is not the number you keep. Between that gain and your bank account sits a layer of federal tax, sometimes a federal surtax, and, depending entirely on where you live, a state tax that can range from nothing to more than a tenth of the profit. Investors who plan around the federal rate alone are often working from an incomplete picture.
