Who Pays Capital Gains Tax?

Publication Date: July 2008

Publisher: Tax Policy Center

Author(s): Eric Toder

Research Area: Banking and finance

Keywords: Tax Distribution and Economic Trends; General Tax Policy; Distribution of Taxes and Income; Capital Gains Taxes

Type: Report


Fewer than one in seven individual income taxpayers reported taxable capital gains in 2006. Over half of taxpayers with gains had incomes below $75,000, but most capital gains were reported by very high income taxpayers. The 3 percent of returns with AGI over $200,000 reported 31 percent of AGI and 83 percent of capital gains; the 0.3 percent with AGI over $1,000,000 reported 15 percent of AGI and 61 percent of capital gains. Many more Americans accrue capital gains on corporate shares they hold within tax-deferred employer-sponsored retirement plans, but they do not pay capital gains tax on these gains.