Tax rate investment

When it comes to capital gains tax, do you know how the tax rate might differ for short-term and long-term investments in the United States?

In the United States, the tax rate for capital gains does indeed differ depending on whether the investment is classified as short-term or long-term. Short-term capital gains are those that are generated from the sale of an asset that has been held for one year or less. Long-term capital gains are those that are generated from the sale of an asset that has been held for more than one year. The tax rate for short-term capital gains is generally higher than the tax rate for long-term capital gains. This is because the government encourages long-term investing by offering a lower tax rate for these types of investments.

Short-term capital gains consist of profits from an asset sold within a year of purchase. They face a tax rate similar to regular income: Between 10% and 37%. However, if you hold onto assets for a year or more, they're long-capital gains. Taxes on those gains top out at 20%, but may be as little as 0%.

Gains from the sale of assets you've held for longer than a year are known as long-term capital gains, and they are typically taxed at lower rates than short-term gains and ordinary income, from 0% to 20%, depending on your taxable income.