The Tax Bill on Your Investments
The return you keep is the only one that counts. Dividends, gains, harvested losses and equity comp each get taxed on different rules, and a few of them are avoidable.
7 articles · about 56 min in total
Start with Gross Income vs Net Income: Why the Gap Is Wider Than You ThinkThe only return that matters is the one you keep. Every article on this path is about the gap between the two, and how much of that gap is a choice rather than a fact.
Some of it genuinely is fixed. Dividends get taxed on their own schedule whether you wanted the cash or not, which is the part of dividend investing that gets talked about least and costs the most in a taxable account.
Plenty of it is not fixed. There is a 0% long-term capital gains bracket, and the thresholds for it have been frozen while wages rose, which quietly moves more people above them each year. Tax-loss harvesting works, unless you trip the wash sale rule, and repurchasing inside an IRA does not delay the loss but destroys it permanently.
Equity compensation is the trap most people meet without warning. Your employer withholds on an RSU vest at a flat supplemental rate, which is very likely below your actual marginal rate. The shares felt fully taxed in October and the bill turns up in April.
Key takeaways
- Employers withhold on RSU vests at a flat supplemental rate that is often below the recipient marginal rate, creating a tax bill that is invisible at vest.
- A wash sale normally defers a disallowed loss into the replacement position basis, but repurchasing inside an IRA destroys the loss permanently instead.
- There is a 0% long-term capital gains bracket, and its frozen thresholds move more taxpayers above it each year as nominal incomes rise.
- Dividends are taxed when paid regardless of whether you wanted the cash, which makes dividend strategies less efficient in a taxable account than in a sheltered one.
Step 1: Gross Income vs Net Income: Why the Gap Is Wider Than You Think
Gross is what you earn. Net is what you keep. The space between those two numbers is where most personal finance mistakes live.
Jan 21, 2025 · 3 min read
Step 2: How Dividends Are Taxed, and Why a Dividend Is Not Free Money
On the ex-dividend date the share price drops by roughly the dividend. The cash did not appear from nowhere, it moved out of the share and into your account, and in a taxable account it moved through a tax on the way. Which is also why dividend capture fails twice over.
Jul 29, 2026 · 9 min read
Step 3: There Is a 0% Capital Gains Bracket. The Numbers to Watch Are the Frozen Ones.
Capital gains has two kinds of number. The brackets get re-indexed for inflation every year. Two others have not moved since 1978 and 2013, and because they never move, they capture more people every year without anyone voting on it.
Jul 29, 2026 · 10 min read
Step 4: A Wash Sale Usually Just Delays Your Loss. Buying It Back Inside an IRA Destroys It.
Trip the wash sale rule in a taxable account and the loss is deferred, not lost: it moves into the cost basis of the replacement shares. Repurchase inside an IRA or HSA instead and there is no basis to move it to, so the deduction is gone permanently. Your broker will not flag it.
Jul 29, 2026 · 9 min read
Step 5: Your Company Withholds 22% on RSUs. Your Real Rate Is Probably 32%.
RSUs are taxed as ordinary income the day they vest, but your employer withholds at a flat supplemental rate that has nothing to do with your actual bracket. That gap is why so many people in tech get an April bill they did not budget for. There is a second, worse error hiding on the 1099-B.
Jul 29, 2026 · 10 min read
Step 6: Where Your Property Taxes Actually Go
Property tax is the most local form of taxation in the US, and the bill that finances most of public-school education, local police, fire, and roads. Here’s how to actually trace where the money lands.
Jul 15, 2025 · 6 min read
Step 7: The 1031 Exchange Runs on Two Clocks You Can't Pause
A Section 1031 like-kind exchange lets you roll the gain from one investment property into the next without paying tax this year. Almost every failed exchange fails for one of two boring reasons: somebody missed a date, or somebody touched the money.
Aug 22, 2026 · 9 min read
Frequently asked questions
- Why do I owe tax on RSUs that were already withheld?
- Because standard withholding on supplemental wages is a flat 22% up to a threshold, while your actual marginal rate is often higher. The full vest value is ordinary income, so the gap between the flat rate and your real rate becomes a balance due at filing.
- What is the wash sale rule?
- It disallows a loss if you buy a substantially identical security within 30 days before or after the sale. In a taxable account the disallowed loss is normally added to the new position basis, so it is deferred. Repurchase inside an IRA and it is lost outright.
- Is there really a 0% capital gains bracket?
- Yes. Long-term capital gains are taxed at 0% below an income threshold, which makes deliberate gain harvesting worthwhile in a low-income year. The thresholds are the numbers to watch, because freezing them while wages rise pushes more people above the line.
- Are dividends taxed differently from capital gains?
- Qualified dividends are taxed at long-term capital gains rates, and non-qualified ones at ordinary income rates. The bigger practical difference is timing: you control when you realize a gain, and you do not control when a dividend is paid.