Capital Gains Tax Calculator

capital_gains_tax.py

from collections import defaultdict
from dataclasses import dataclass

inf = float("inf")

# Married filing jointly standard deduction
# https://apps.irs.gov/app/vita/content/00/00_13_005.jsp?level=basic
standard_deduction = 30_000

# NJ joint filing tax brackets
# https://www.nj.gov/treasury/taxation/taxtables.shtml
state_income_tax_brackets = [
    {"bracket": (         0,    20_000), "rate":  1.400/100},
    {"bracket": (    20_000,    50_000), "rate":  1.750/100},
    {"bracket": (    50_000,    70_000), "rate":  2.450/100},
    {"bracket": (    70_000,    80_000), "rate":  3.500/100},
    {"bracket": (    80_000,   150_000), "rate":  5.525/100},
    {"bracket": (   150_000,   500_000), "rate":  6.370/100},
    {"bracket": (   500_000, 1_000_000), "rate":  8.970/100},
    {"bracket": ( 1_000_000,       inf), "rate": 10.750/100},
]

# Federal income tax brackets for married filing jointly
# https://www.irs.gov/filing/federal-income-tax-rates-and-brackets
federal_income_tax_brackets = [
    {"bracket": (       0,   23_850), "rate": 10/100},
    {"bracket": (  23_850,   96_950), "rate": 12/100},
    {"bracket": (  96_950,  206_700), "rate": 22/100},
    {"bracket": ( 206_700,  394_600), "rate": 24/100},
    {"bracket": ( 394_600,  501_050), "rate": 32/100},
    {"bracket": ( 501_050,  751_600), "rate": 35/100},
    {"bracket": ( 751_600,      inf), "rate": 37/100},
]

# Federal LTCG tax brackets for married filing jointly
# https://www.irs.gov/taxtopics/tc409
def federal_ltcg_brackets(ordinary_income: int):
    brackets = [
        {"bracket": (       0,   96_700), "rate":  0/100},
        {"bracket": (  96_700,  600_050), "rate": 15/100},
        {"bracket": ( 600_050,      inf), "rate": 20/100},
    ]
    # Preferential income is "stacked" on top of ordinary income
    # https://www.kitces.com/blog/long-term-capital-gains-bump-zone-higher-marginal-tax-rate-phase-in-0-rate/
    for bracket in brackets:
        bracket["bracket"] = tuple(map(lambda x: max(0, x - ordinary_income), bracket["bracket"]))
    return brackets

# Net Investment Income Tax brackets for married filing jointly
# https://www.irs.gov/taxtopics/tc559
niit_brackets = [
    {"bracket": (250_000, inf), "rate": 3.8/100},
]


@dataclass
class Tax:
    total_income: float
    federal_tax: float
    federal_rate: float
    state_tax: float
    state_rate: float

    def __init__(self, ltcg: int, stcg: int, dividends: int, qualified_dividends: int = 0):
        stcg += dividends
        ltcg += qualified_dividends
        self.total_income = ltcg + stcg

        # NJ treats any capital gain as regular income
        self.state_tax = Tax.for_bracket(income=self.total_income, brackets=state_income_tax_brackets)
        self.state_rate = 100*self.state_tax/self.total_income

        stcg -= standard_deduction
        if stcg < 0:
            ltcg = max(0, ltcg + stcg) # apply the extra standard deduction to LTCG
            stcg = 0

        self.federal_tax = sum([
            Tax.for_bracket(income=stcg,      brackets=federal_income_tax_brackets),
            Tax.for_bracket(income=ltcg,      brackets=federal_ltcg_brackets(stcg)),
            Tax.for_bracket(income=stcg+ltcg, brackets=niit_brackets),
        ])
        self.federal_rate = 100*self.federal_tax/self.total_income


    @staticmethod
    def for_bracket(income: float, brackets: list) -> float:
        tax = 0
        for (bottom, top), rate in ((b["bracket"], b["rate"]) for b in brackets):
            tax += max(0, min(top, income) - bottom) * rate
        return tax
    
    def __str__(self):
        return "\n".join([
            f"Total Income: ${round(self.total_income)}",
            f"Federal Taxes: ${round(self.federal_tax)}",
            f"Federal Rate: {round(self.federal_rate, 1)}%",
            f"State Taxes: ${round(self.state_tax)}",
            f"State Rate: {round(self.state_rate, 1)}%",
            f"Total Taxes: ${round(self.federal_tax + self.state_tax)}",
            f"Total Rate: {round(self.federal_rate + self.state_rate, 1)}%",
            f"Income after taxes: ${round(self.total_income - self.federal_tax - self.state_tax)}"
        ])


if __name__ == "main":
    print(Tax(ltcg=500_000, stcg=0, dividends=250_000))