Long-term gains are from assets held over 12 months, taxed at 0%, 15%, or 20%. Short-term gains (held 12 months or less) are taxed as ordinary income at your marginal tax rate, which can be up to 37%.
- Holding 366+ days qualifies for long-term rates (0%, 15%, or 20%)
- Short-term gains add to ordinary income – could push you into a higher bracket
- Difference can be huge: 37% short-term vs 15% long-term on the same $50K gain saves $11,000
- The holding period starts the day after purchase and includes the sale date
| Income Range (Single) | Short-Term Rate | Long-Term Rate |
|---|---|---|
| Up to $47,025 | 10–12% | 0% |
| $47,026–$100,525 | 22% | 15% |
| $100,526–$191,950 | 24% | 15% |
| $191,951–$518,900 | 32–35% | 15% |
| Over $518,900 | 37% | 20% |