Long-Term Capital Gains

Definition

Long-term capital gains are profits from the sale of assets held for more than one year. They receive preferential tax treatment with rates of 0%, 15%, or 20%, depending on your taxable income and filing status. These rates are significantly lower than ordinary income tax rates for most taxpayers, creating an incentive to hold investments for at least a year before selling. Net investment income may also be subject to an additional 3.8% surtax.