What is the capital gains tax rate on the sale of collectibles or qualified small business stock held for more than 5 years?

The capital gains tax rate on the sale of collectibles, such as art, antiques, or coins, as well as qualified small business stock held for more than five years, is indeed set at 28%. This higher rate is specifically designated for collectibles due to their potential for appreciation and the unique nature of their market. These assets are treated differently than other investments, such as stocks and bonds, which may be subject to lower capital gains rates.

The 28% rate applies to gains derived from the sale of collectibles, reflecting the IRS's intention to impose a higher tax rate on these types of assets. It is important to recognize that this rate applies regardless of the taxpayer's income level, making it distinct from the standard capital gains tax rates of 0%, 15%, or 20% that apply to most other long-term investments. Thus, understanding the specific tax implications for different asset types is crucial in tax preparation and planning.