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Capital gains tax rates are determined by the type of investment asset and how long of a holding term the asset was held.
In additional to the federal capital gains tax rates, your capital gains may also be subject to state income taxes. Most states do not have separate capital gains tax rates. Instead, they will tax your capital gains as ordinary income subject to the state income taxes rates.
Starting with 2008, there's a new zero percent tax rate on long-term capital gains. The zero percent rate applies to individuals who are in the 10% and 15% marginal tax brackets. The zero percent rate is scheduled to expire at the end of 2010.
Capital Gains Tax Rates
|
Type of Capital Asset |
Holding Period |
Tax Rate |
|
Short-term capital gains (STCG) |
One year or less |
Ordinary income tax rates up to 35% |
|
Long-term capital gains (LTCG) |
More than one year |
5% for taxpayers in the 10% and 15% tax brackets (zero percent starting in 2008) |
|
|
|
15% for taxpayers in the 25%, 28%, 33%, and 35% tax brackets |
|
Collectibles |
One year or less |
STCG tax rates up to 35% |
|
Collectibles |
More than one year |
28% |
|
Small Business Stock Gains (Section 1202) |
More than five years |
28% on the gain not excluded |
|
Real Estate Main Home |
One year or less |
STCG |
|
|
More than one year |
LTCG taxed at 5% or 15% after any exclusion amount |
Personal Residence Tax Exemption: IRS tax exemption regarding living in your personal residence for 24 months of last 5 years. You may take up to $500,000 in profits tax free deduction on the sale of your home if you're married or $250,000 in profits if you're single
