Federal Income Tax

Capital Gains Tax Rate

The capital gains tax is the tax you pay on the sale of a non-inventory asset. This tax applies to the profit, not the gross income from the asset. The capital gains tax rate is different depending on whether the gain is a long or short-term capital gain.

While the long-term capital gain is taxed on its own at 0, 10, and 15 percent, the short term capital gain is taxed ordinarily. Therefore, the short-term capital gains will be added to your taxable income. This will make you pay taxes as if the capital gain were ordinary income from a job or business.

Short-Term Capital Gains Tax

The short-term capital gains tax is paid if the asset is held for one year or less. The profit on the sale of the asset will be added to your taxable income, thus, you will be taxed at a rate according to the tax brackets.

Assume your taxable income is $100,000 and you’ve earned $20,000 by selling stocks. The profits from the $20,000 will be added to your taxable income and you will pay capital gains taxes that way. So, with short-term capital gains, there isn’t a specific tax rate.

Long-Term Capital Gains Tax

If you hold an asset for more than one year, it will be considered as a long-term capital gain for tax purposes.

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The long-term capital gains are taxed on their own rather than being added to taxable income. The rates are from 0 to 20 percent depending on adjusted gross income and filing status. You can see the below tables to see the tax rate that applies to each filing status.

Filing Status0%15%20%
Single$0 to $40,000$40,001 to $441,450$441,451 or more
Married Filing Jointly$0 to $80,000$80,001 to $496,600$496,601 or more
Married Filing Separately$0 to $40,000$40,001 to $248,300$248,3001 or more
Head of Household$0 to $53,600$53,601 to $469,050$469,051 or more

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