Capital Gains
Profit realized on selling an asset for more than it cost, taxed by holding period.
Bought at $50 and sold at $80, the $30 is a capital gain. It becomes taxable only on sale. An unrealized gain is untaxed for as long as the position is held, which makes the timing of a sale a decision with a tax consequence attached.
The holding period splits the treatment. Held a year or less, gains are taxed as ordinary income, currently as high as 37%. Held longer than a year, they fall to the long-term rates of 0%, 15% or 20%, plus the 3.8% net investment income tax above certain thresholds.
The size of that step is what makes the boundary worth knowing. The same gain can face a rate 15 to 20 points apart depending on which side of the twelve-month line the sale falls, and the line is measured from the day after acquisition.
Worked through
Short-Term (< 1 year)
- Taxed as ordinary income
- Rate: 10%–37%
No preferential treatment
Long-Term (> 1 year), single filer 2026
- 0% (taxable income to $49,450)
- 15% (to $545,500)
- 20% (above $545,500)
Rates 15 to 20 points below short-term
Related in Investments & Portfolio
See your own capital gains
Promi computes this from your linked accounts, with the definition one click from the number.
Open the live demo