Older Taxpayers Earn Lion's Share of Capital Gains Income

 
 
July 15, 2010

Yesterday, we reported on some new IRS data showing the distribution of dividend income by age group. Today, we have a similar set of data on capital gains income by age group. As is the case with dividend income, it is clear that older taxpayers earn the lion's share of capital gains income and that allowing the current 15 percent tax rate on capital gains income to rise to 20 percent in 2011 (and to 23.8 percent on some gains in 2013) will disproportionately hurt older Americans.

As the table below shows, while 6 percent of all tax returns reported some capital gains income, 13 percent of taxpayers over age 65 reported capital gains income. Indeed, one-third of all taxpayers reporting capital gains income are over age 65 and they earn 30 percent of all capital gains income. Capital gains income comprises 12 percent of their total adjusted gross income.

The table also shows that capital gains income is not concentrated solely on the over 65 set. Indeed, 40 percent of taxpayers reporting capital gains income are between the ages of 45 and 65 - those building up to retirement - and they earn nearly half of all capital gains income.  

These statistics help put a face on taxpayers who will be impacted by higher taxes on capital gains income. Something lawmakers should consider as the expiration of the Bush tax cuts nears at the end of 2010. 

 

2008 Capital Gains Statistics by Age Group

 

Age Group

Number of Tax Returns with Capital Gains Income

Capital Gains Income ($Thousands)

Percentage of  Returns within Age Group with Capital Gains Income

Percentage of Capital Gains Returns in this Age Group

Percentage of Capital Gains Income Earned by Age Group

Capital Gains Income as Share of Total AGI

All returns

8,052,357

$495,146,902

6%

100%

100%

6%

   Under 18

175,733

$1,584,716

6%

2%

0%

13%

   18 under 26

411,509

$3,515,547

2%

5%

1%

1%

   26 under 35

564,869

$13,081,980

2%

7%

3%

1%

   35 under 45

1,062,369

$82,558,916

4%

13%

17%

5%

   45 under 55

1,599,667

$126,113,517

6%

20%

25%

6%

   55 under 65

1,596,346

$117,558,437

8%

20%

24%

7%

   65 and over

2,641,864

$150,733,789

13%

33%

30%

12%

   Source: IRS http://www.irs.gov/pub/irs-soi/08in15ag.xls

 
                 

Buy this blogger a cup of coffee!

Sizes

Follow Us

About the Tax Policy Blog

Subscribe to Tax Foundation - Tax Foundation's Tax Policy Blog The Tax Policy Blog is the official weblog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.

Monthly Archive

Privacy Policy