You Should Keep In Mind The Huge Tax Hikes Coming Next Year When Deciding Whether To Sell Domains
If you make $200K or more there is a huge tax hike coming for next year if you are in the United States.
In the domain business it can only tax one domain name sale to put you over the top into the “rich people” tax bracket.
Its pretty hard to keep politics out of any discussion about taxes but we are going to try to stick to the facts
If your pondering a big sale there are some tax implications you should be aware of:
Starting in 2013, families whose overall income is above $250,000 (individuals with income over $200,000) will pay an additional tax of 3.8% on taxable investment income (e.g., interest, dividends, capital gains, rents, royalties) to pay for the health care reform and the Bush tax breaks also expire.
So with the combination for 2013, the The top tax rate on ordinary income will rise from 35% to 43.4%.
The top tax rate on capital gains will rise from 15% to 23.8%
The top tax rate on dividends will rise from 15% to 43.4%
All and all its a very substantial tax increase percentage wise from 33% to 300%.
Take note that these tax rates will go into effect unless Congress passes a bill to lower the tax rates and the President signs the bill, which is extremely unlikely to happen, so to be clear if there is inaction these new tax rates go into effect on January 1, 2013.
Also you should note that President Obama has is on record wanting to increase the capital gains rates to 30% on those making $1M or more so the tax increases that go into effect in 2013 may go even higher for some.
You should understand that for many domainer the same dollar sale this year is going to be taxed at a much lower rate than if the domain sells next year.