What is a capital gains tax?

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. Capital gains taxes are due only after an investment is sold.

Are capital gains taxable?

Net capital gains are taxed at different rates depending on overall taxable income, although some or all net capital gain may be taxed at 0%. For taxable years beginning in 2023, the tax rate on most net capital gain is no higher than 15% for most individuals. A capital gains rate of 0% applies if your taxable income is less than or equal to:

How are capital gains taxed if you sell your investments?

Taxes are determined by your income level and how long you held the investment before selling. Generally, the capital gains tax rate is higher for short-term gains (investments held for 1 year or less) than for long-term gains (investments held for longer than 1 year). Being in the green when you sell your investments can come with a tax bill.