How much tax do you pay on investment income?

The tax rate you pay on your investment income depends on how you earn the money. Learn about the taxation of: Dividends Capital gains Interest income GOOD TO KNOW The tax information presented here only applies to federal taxation. Individual states may have their own taxes on investment earnings.

How is earned income taxed?

While these forms of income aren't being actively earned, they originate from your (or someone else's) earned income, so they are taxed as such. Speaking of taxes, earned income is taxed according to the marginal tax rates, or tax brackets. For 2018, the U.S. tax brackets have changed significantly as a result of the Tax Cuts and Jobs Act:

What is investment income?

Businesses often have income from investments. On the income statements of publicly traded companies, an item called investment income or losses is commonly listed. This is where the company reports the portion of its net income obtained through investments made with surplus cash instead of being earned in its usual line of business.