The New Tax Act: Should You Revamp Your Portfolio?

by Maria Crawford Scott

The New Tax Act: Should You Revamp Your Portfolio? Splash image

Lower tax rates for taxable investments are one reason to cheer the new tax act.

But making certain investment decisions, particularly regarding taxable versus tax-deferred assets, won’t be any easier.

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Under the Jobs and Growth Reconciliation Tax Act of 2003, qualified dividends and long-term capital gains are taxed at a maximum rate of 15%; under the old rates, dividends were taxed as ordinary income at a maximum rate of 38.6%, and long-term capital gains had a top rate of 20%. Short-term gains are still taxed as ordinary income. The new rate applies to qualified dividends received on or after January 1, 2003 and long-term capital gains (held more than one year) realized on or after May 6, 2003.

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