How do federal and New York state tax rates apply to a $60,000 withdrawal from a non-retirement brokerage account for a married couple filing jointly?
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To answer how federal and New York State tax rates apply to a $60,000 withdrawal from a non-retirement brokerage account for a married couple filing jointly in 2025, we must determine the character of the income realized from the withdrawal, as tax treatment depends on whether the withdrawal consists of capital gains, dividends, interest, or a combination. For this analysis, I will assume the $60,000 consists entirely of long-term capital gains and qualified dividends, as these are the most common types of income from a brokerage account and are subject to preferential rates. If the withdrawal is from principal (basis), there is no tax; if it is from short-term capital gains or interest, ordinary income rates apply.
1. Federal Tax Treatment
a. Long-Term Capital Gains and Qualified Dividends
- Tax Rates: For 2025, long-term capital gains and qualified dividends are taxed at 0%, 15%, or 20%, depending on taxable income.
- Thresholds for Married Filing Jointly (2025):
- 0% rate: up to $96,700 of taxable income
- 15% rate: up to $600,050 of taxable income
- 20% rate: above $600,050 of taxable income
If the couple’s total taxable income (including the $60,000 gain/dividend) is less than $96,700, the entire $60,000 is taxed at 0%. If their taxable income is between $96,700 and $600,050, the portion of the $60,000 that falls within this range is taxed at 15%. Any portion above $600,050 is taxed at 20%.
b. Ordinary Income (Interest, Short-Term Gains)
If the $60,000 consists of interest or short-term capital gains, it is taxed at ordinary income rates. For 2025, the federal tax brackets for married filing jointly are as follows:
The $60,000 is added to the couple’s other New York taxable income and taxed according to these brackets.
c. Tax Benefit Recapture
If the couple’s New York adjusted gross income exceeds $107,650, New York’s tax benefit recapture provisions may apply, increasing their effective tax rate by phasing out the benefit of lower brackets. This can result in a higher effective tax rate, especially as income enters higher brackets.
3. Summary of Application
- Federal: If the $60,000 is long-term capital gain/qualified dividend, it is taxed at 0%, 15%, or 20% depending on total taxable income. If it is interest or short-term gain, it is taxed at ordinary income rates.
- New York State: The $60,000 is taxed as ordinary income, regardless of character, at rates ranging from 4% to 10.9% depending on total NY taxable income. If NY AGI exceeds $107,650, tax benefit recapture may increase the effective rate.
4. Example Calculation
Assume the couple has no other income or deductions:
- Federal: $60,000 of long-term capital gain/qualified dividend, taxable income = $60,000.
- Entire amount falls under the $96,700 threshold → taxed at 0%.
- New York State: $60,000 taxable income.
- First $17,150 at 4% = $686
- Next $6,450 ($23,600–$17,150) at 4.5% = $290
- Next $4,300 ($27,900–$23,600) at 5.25% = $226
- Remaining $32,100 ($60,000–$27,900) at 5.5% = $1,766
- Total NY tax: $686 + $290 + $226 + $1,766 = $2,968
If the couple has other income, the $60,000 would be taxed at higher marginal rates as it is added on top of their other income.
5. Key Considerations
- The character of the income (long-term capital gain, qualified dividend, short-term gain, interest) is crucial for federal tax but not for New York State tax.
- New York does not provide a lower rate for capital gains or qualified dividends.
- Tax benefit recapture can increase the effective NY tax rate for higher-income taxpayers.
If you provide the couple’s total income and deductions, a more precise calculation can be made. If the $60,000 includes other types of income, or if you need to consider local (NYC) taxes, please specify.
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