The reason this works is that Hacksawdave's marginal federal tax rate is 27%. Every additional dollar of ordinary income is taxed at 12%, but it also causes a dollar of qualified dividends to be taxed at 15%. 27% is about the point at which municipal bonds from your state become more attractive than Treasury bonds.Ah, I think I'm catching on. As a salaried person, I'm never in the 0% capital gains bracket. But if my salary goes to 0, and most of my income comes from interest and dividends, then any tax I'm paying on interest or unqualified dividends eats into the 0% bucket for the qualified dividends.I still hold all three CA funds in year 5 of early retirement, even though I am now in a minuscule tax bracket. I use a hybrid withdrawal plan that keeps me at the 0% tax rate for my qualified dividends and long-term capital gains. Another reason why I do not switch to a taxable money market fund.
Statistics: Posted by grabiner — Tue May 07, 2024 9:40 pm — Replies 21 — Views 1431