Hi everyone,
I have a question that's probably foolish but has me confused. I know that long term capital gains rate is 15% if you are in the >25% and 0% if you are in the 10 or 15% brackets (I think dividends follow a similar rule?). Where I'm confused is if an individual lives solely off capital gains, how does the income tax rate get calculated? Say a single individual has no wages, interest income, dividends (hypothetical, I know) and lives by selling ~$40k of capital gains a year. Do capital gains go towards figuring an individual's tax bracket, so this person would have $40k of income and be in the 25% bracket, and then the income would be taxed at 15%?