Taxes

What Is Capital Gains Tax?

Capital gains tax is a tax on the profit made from selling an asset, such as stocks, bonds, or property, for more than its purchase cost. In the United States, gains on assets held longer than one year are long-term and taxed at lower rates; assets held one year or less produce short-term gains taxed as ordinary income.

How the Gain Is Calculated

Capital gain = sale price − cost basis (the purchase price plus certain costs). If the result is negative, it is a capital loss, which may offset gains under tax rules.

Long-Term Rates

US long-term capital gains are taxed at 0%, 15%, or 20% federally depending on taxable income, and high earners may also owe the 3.8% Net Investment Income Tax. The income thresholds are adjusted annually.

Other Countries

Many countries tax capital gains differently or not at all; rules depend on the jurisdiction.

🧮 Calculate It Yourself

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📈 Capital Gains Tax Calculator Compare short-term vs. long-term capital gains tax. Calculate → 📐 ROI Calculator Return on investment, net gain, and annualized ROI — any currency. Calculate →

🔗 Related Terms

Capital Gain Taxable Income Marginal Tax Rate

More Taxes Terms

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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.