Songwriters Capital Gains Tax Equity Act


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In observation of Martin Luther King Jr. Day on Monday, January 18, 2021, NSAI will be closed. We will resume business on Tuesday, January 19, 2021 at 10:00am Central.

In May 2006, the “Songwriters Capital Gains Tax Equity Act” was signed into law. This legislation was envisioned by NSAI to benefit American songwriters who sell a song catalogue. Previously, when a songwriter sold a “catalogue” they paid ordinary income taxes AND self-employment taxes that could amount to more than 40% of their income from the sale. Now they are eligible for the prevailing flat “Capital Gains” business tax rate.

The legislation applies only when a songwriter sells the royalty stream on a group of songs (song catalogue), and does not apply to ordinary royalty income.

This landmark legislation was a matter of fairness for the American songwriting profession. Decades ago, the tax category in which songwriters pay taxes was changed and they should have become immediately eligible for this tax treatment. Through an oversight, the language in the U.S. Tax Code that would have permitted the appropriate tax rate never evolved.

In December 2006, the “Songwriters Capital Gains Tax Equity Act” was made a permanent part of the tax code.