Capital Gains Tax In USA
A capital gains tax is a tax imposed on the sale of an asset. The long-term capital gains tax rates for the 2023 and 2024 tax years are 0%, 15%, or 20% of the profit, depending on the income of the filer.
An investor will owe long-term capital gains tax on the profits of any investment owned for at least one year. If the investor owns the investment for one year or less, short-term capital gains tax applies. The short-term rate is determined by the taxpayer's ordinary income bracket.
Types of Capital Gains
Short-Term Capital Gains:Long-Term Capital Gains:
Tax Rates for Long-Term Capital Gains (2024)
Special Cases
Calculating Capital Gains
1.Determine the Basis: The basis is usually the purchase price of the asset, including any commissions or fees.
2.Calculate the Gain or Loss: Subtract the basis from the selling price.
3.Determine the Holding Period: Establish whether the gain is short-term or long-term.
4.Apply the Appropriate Tax Rate: Depending on the holding period and income, apply the corresponding tax rate.
