Capital Gains Tax

Capital gains tax is a tax on the profits from the sale of an asset, such as a stock, bond, or piece of property. The tax rate depends on how long you’ve owned the asset and your tax bracket.

If you sell an asset for more than you paid for it, you have a capital gain. For example, if you buy a stock for $50 and sell it later for $100, you have a $50 capital gain. If you have a capital gain, you may have to pay taxes on it.

The amount of tax you owe depends on your tax bracket and how long you held the asset. Short-term capital gains are taxed at your ordinary income tax rate, which could be 10%, 12%, 22%, 24%, 32%, 35%, or 37%. Long-term capital gains are taxed at a lower rate: 0%, 15%, or 20%.

To figure out your long-term capital gains rate, first add up your total taxable income from all sources (wages, interest, dividends, etc.). Then see which range below that income falls into.

If your taxable income is: Your long-term capital gains rate is:

Less than $39,375 0%

$39,375-$434,550 15%

More than $434,550 20%.