Mika
VIP Contributor
Generally speaking, you pay three different kinds of taxes. The money you earn by working actively, or earned income, has the highest taxes because you are trading your time for money. Portfolio income, also known as capital gains, is money you make by selling something. For example, if you buy a house for $100k and sell it for $200k, you've made a $100k capital gain. Capital gains have the second highest taxes. Passive income is money that keeps coming in whether you are working or not. For instance, if you get dividends from your stocks, that's passive income. This type of income has the lowest taxes.
