The Significance of Capital Gains Taxes

Capital gains tax is a levy on the profit you make from selling a capital asset, such as a stock, bond, or piece of property. The profit, known as a capital gain, is the difference between the asset's sale price and its original purchase price, or "basis," adjusted for certain expenses. 

Key Takeaways:

• For the 2025 tax year, the long-term rates are 0%, 15% or 20%, according to Investopedia. The rate is dependent on the filer’s income, and the taxable assets must have been held for a year or more (see chart below). 

• Different categories are subject to different capital gains tax treatment. For example, art, jewelry and precious collections are taxed at graduated tax rates. Conversely, the sale of a principal residence means that the capital gains on that home are not subject to taxable income. 

• Calculating capital gains taxes may be more complex if the filer has incurred gains and losses on both short and long-term investments. Without this variable, capital losses may be subtracted from capital gains in order to calculate taxable gains. 

Interested in learning more? 

See: Investopedia Capital Gains Tax: What It Is, How It Works, and Current Rates.

Source: Investopedia