Profit from selling an asset for more than you paid.
Held over a year, gains get preferential rates (0%, 15%, or 20% federally in 2025); a year or less is taxed like wages. The holding-period line is the single most controllable tax lever investors have.
Example: A $50,000 long-term gain on $85,000 of other income owes ~$7,100 federal (2025).
FAQ
What is Capital Gains in simple terms?
Held over a year, gains get preferential rates (0%, 15%, or 20% federally in 2025); a year or less is taxed like wages. The holding-period line is the single most controllable tax lever investors have.