Is the tax bracket based on total of (salary + short term capital gains) or just salary?

Question

I fell in tax bracket of X last year and my salary is same today. But I have short term capital gains to file this year. So is the tax bracket X still apply for both my salary and capital gains or does it change based on the total of (salary + capital gains) amount?

Answer 1

it is based on your total income, after your deductions,,,,,, so yes,,, the short term gains would be added to you salary,,,,,, whether it is enough to move you into a new bracket, would depend on exactly were you were before,,,,, high end or low end of the X bracket, and how much the gains are

Answer 2

The "tax bracket" is based on your "regular" taxable income, which includes salary + interest + non-qualified dividends + short-term capital gains + prizes/gambling winnings + some other things MINUS exemptions and deductions (standard or itemized), so a lot of things besides salary can affect which bracket you are in.

That said, I think a lot of people make too big a deal out of being "thrown in a higher tax bracket". The higher rate only applies to the income above the top of the prior bracket. So, for example, if your income is $100 above the lower limit for the 25% bracket, you only pay 25% on that $100, not your entire income. That's only $10 more than it would be if you were still in the 15% bracket. I think a lot of people think if you go in the higher bracket, you have to pay the higher rate on ALL of your income, which isn't true.