Taxes and Real Investment Value
Annie invested in a set of stocks and made $4,000 in
profit. She has learned that she will have to pay taxes on
the profit she has made.
Here are the tax rates affecting Annie's investment:
State tax: 5%
Federal tax: 25%
Annie must pay
in taxes to the state
government on her investment
She also must pay
in taxes to the federal
government
As a result of the money she will lose to taxes, the real
value of Annie's profit is