Understanding Capital Gains Taxes: A Comprehensive Guide
Types of Capital Gains Taxes
Capital gains taxes are levied on profits made from the sale of an asset, such as stocks, bonds, or real estate. There are two types of capital gains taxes:
1. Short-Term Capital Gains Tax
These taxes are imposed on the sale of assets held for one year or less. They are taxed at the investor's ordinary income tax rate, which ranges from 10% to 37%.
2. Long-Term Capital Gains Tax
These taxes are applied to the sale of assets held for more than one year. They are taxed at lower rates than ordinary income:
- 0% for taxpayers in the 0% to 50% marginal tax brackets
- 15% for taxpayers in the 50% to 200% marginal tax brackets
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