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2021 was a banner year for most financial assets. The S&P 500 stock index, a broad measure of the U.S. stock market and a core holding in many brokerage accounts and 401(k) plans, rose nearly 27 percent last year. Many individual stocks, such as COVID-19 vaccine maker Moderna (+143 percent) and automaker Ford Motor (+136 percent), posted even bigger gains. Homeowners also saw the equity in their homes spike, with the median price of an existing home — meaning half were higher and half were lower — jumping 13.9 percent to $353,900 in the past year through November.
The upshot? All that asset appreciation means retirees who sold assets with big gains to pay the monthly bills or lock in profits could be looking at a sizable 2021 capital gains bill from the IRS. Simply put, a capital gain is a tax on the profits (minus your cost basis) you make when you sell a financial asset.
“The good news is you made a lot of money last year in a lot of different investments; the bad news is Uncle Sam is coming to call,” says Daniel Genter, president, CEO and chief investment officer at RNC Genter Capital Management. And when it comes to investment returns, he adds, “it’s not what you make, it’s what you keep.”
To give you an idea of how big a bite the IRS will take from last year’s investment gains, here’s a primer on 2021 capital gains tax rates for assets ranging from stocks to silver.

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Retirement distributions
If you’re 59½ or older and withdrew money from traditional retirement accounts — such as a 401(k) or IRA that is funded with dollars you didn’t pay income tax on — you’ll be taxed at your ordinary income tax rate. So any retirement fund distributions you took in 2021 will be part of your taxable income, no different than a paycheck or interest you earn on a savings account or certificate of deposit. The IRS tax brackets for 2021 (which are based on income ranges) are 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent and 37 percent. The income tax system is graduated: Individual taxpayers would pay the top rate only on taxable income greater than $523,600, and married couples filing jointly would pay the top rate on income above $628,300.
One thing to watch out for: When you take a large distribution to pay for things like your grandkids’ college tuition or a down payment on a retirement home, you run the risk of paying more in taxes due to the withdrawal. “You can bump up to a higher tax bracket,” says Daniel Milan, managing partner at Cornerstone Financial Services. That could mean more of your income gets taxed at a higher rate.
Of course, withdrawals from Roth IRAs and Roth 401(k)s aren’t subject to any taxes, since these retirement savings accounts are funded with after-tax dollars. So if you withdrew $100,000 from a Roth IRA to buy a beach house, for example, you’ll owe zero taxes on the distribution.
Stocks
When you sell a stock for a profit, that profit is subject to capital gains tax. (That assumes, of course, that the sale didn’t occur in a tax-protected account such as a 401(k) plan.) And if you made a killing in cryptocurrencies, such as bitcoin, you’re also subject to capital gains tax. The amount of tax you’ll have to fork over will depend on how long you held the asset before selling it and what your taxable income is. Profits on assets held for one year or less are subject to short-term capital gains, which are taxed at ordinary income tax rates ranging from 10 percent to 37 percent.
Profits from selling assets you own for more than a year are long-term capital gains. Those held for more than a year get more favorable tax treatment, and the lower your taxable income, the lower your long-term capital gains rate will be. The IRS says the net capital gains tax for most individuals is no higher than 15 percent. Here are the capital gains tax rates for the 2021 tax year.
- 0 percent capital gains rate. If your taxable income is less than or equal to $40,400 (single) or $80,800 (married filing jointly), you’ll pay 0 percent in capital gain
- 15 percent capital gains rate: The 15 percent capital gains tax kicks in for moderate to high earners with taxable income of more than $40,400 but less than or equal to $445,850 for single filers; more than $80,800 but less than or equal to $501,600 for married filing jointly; more than $54,100 but less than or equal to $473,750 for head of household; or more than $40,400 but less than or equal to $250,800 for married filing separately.
- 20 percent capital gains rate: The higher 20 percent capital gains rate is levied when your taxable income exceeds the thresholds set for the 15 percent capital gains rate.