itonewbie
Level 15
‎04-07-2023 07:09 PM

Sounds right.  Your answer is in §1(h)(B).

The threshold for 25% for MFJ back in 2016 was $75,300 and that is indexed to $83,350 this year.  That's why your client's qualified dividends are taxed at 0%.

(h) Maximum capital gains rate

(1) In generalIf a taxpayer has a net capital gain for any taxable year, the tax imposed by this section for such taxable year shall not exceed the sum of—
(A) a tax computed at the rates and in the same manner as if this subsection had not been enacted on the greater of—
(i)
taxable income reduced by the net capital gain; or
(ii) the lesser of—
(I)
the amount of taxable income taxed at a rate below 25 percent; or
(II)
taxable income reduced by the adjusted net capital gain;
(B) 0 percent of so much of the adjusted net capital gain (or, if less, taxable income) as does not exceed the excess (if any) of—
(i)
the amount of taxable income which would (without regard to this paragraph) be taxed at a rate below 25 percent, over
(ii)
the taxable income reduced by the adjusted net capital gain;

 

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