Taxes on capital gains are going up. The maximum federal rate for long-term gains is going from 15% now to 20% in January, absent an extension of the Bush tax cuts (very unlikely). State and local taxes can easily add 10 points to this rate. Being able to deduct state and local income taxes on your federal return softens the bite but is not permitted for the many taxpayers afflicted by the alternative minimum tax.
Here’s what’s left in cap gains tax avoidance.