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Capital Gains Tax Rates

A capital gains tax is a tax charged on profit realized on the sale of a non-inventory asset that was sold for more than it's purchase  price. The most common capital gains are realized from the sale of stocks, bonds, precious metals and property.

 

Capital gains tax rates are determined by the type of investment asset and the length of time held.
In additional to the federal capital gains tax rates, your capital gains will also be subject to state income taxes. Most states will tax your capital gains as ordinary income subject to the state income taxes rates since many do not have separate state capital gains tax rates.

Capital Gains Tax Rates

Type of Capital Asset Holding Period Tax Rate

Federal Capital Gains Tax Rates

Tax Bracket Capital Gain Tax Rate Short Term Long Term 10% 10% 0% 15% 15% 25% 25% 15% 28% 28% 33% 33% 35% 35%

 

• Short-term capital gains (STCG) One year or less Ordinary income tax rates up to 35%

• Long-term capital gains (LTCG) More than one year 0% for taxpayers in the 10% and 15% tax brackets.
  15% for taxpayers in the 25%, 28%, 33%, and 35% tax brackets

• Collectibles One year or less STCG tax rates up to 35%

• Collectibles More than one year 28%

• Small Business Stock Gains (Section 1202) More than five years 28% on the gain not excluded

• Real Estate Main Home One year or less STCG
  More than one year LTCG taxed at 5% or 15% after any exclusion amount

  • Also see personal residence capitol gains exclusion

Just about everything you own and use for personal or investment purposes is a capital asset. Examples are your home and property, household furnishings, mutual funds, stocks and bonds. When you sell a capital asset, the difference between the amount you sell it for and your original purchase price is the capital gain, or in the event the value went down it is a capital loss.

 

A new zero percent tax rate began in 2010 - on long-term capital gains, and applies to individuals who are in the 10% and 15% marginal tax brackets. This zero percent rate expires at the end of 2011, when capital gains rates are scheduled to increase to at least 15%, unless congress renews the 0%.

Capital gains rates are designed to encourage consumers to make long-term investments.