Table of Contents
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When you sell an investment for profit, Uncle Sam wants his cut. Understanding how capital gains taxes work can help you keep more of your returns.
Key Takeaways
A simple explanation of capital gains tax rates and how they affect your investment returns.
- Short-Term vs. Long-Term
- Strategies to Minimize Tax
- Frequently Asked Questions
- Conclusion
- Related Calculators
Short-Term vs. Long-Term
Assets held for less than a year are taxed as Ordinary Income (high rates). Assets held for over a year get preferential Long-Term Capital Gains rates (0%, 15%, or 20%).
Strategies to Minimize Tax
- Hold for 1+ Year: Always aim for long-term status.
- Tax-Loss Harvesting: Sell losing investments to offset gains.
- Use Tax-Advantaged Accounts: Trading inside an IRA or 401(k) triggers no capital gains taxes.
Frequently Asked Questions
How can I lower my taxable income?
Contribute to 401(k)s, HSAs, and IRAs to reduce taxable income.
What is the standard deduction?
For 2026, it is $15,000 for single filers and $30,000 for married filing jointly (est).
When are taxes due?
Typically April 15th, unless it falls on a weekend or holiday.
Conclusion
Tax efficiency is a key part of total return. Don't let taxes erode your hard-earned investment growth.