Long-Term Capital Gains
Long-term capital gains are profits from selling assets held for more than one year, taxed at preferential rates of 0%, 15%, or 20% depending on taxable income, significantly lower than ordinary income tax rates.
Exam Tip
LTCG requires holding MORE than 1 year. Rates: 0/15/20%. Add 3.8% NIIT for high earners. Collectibles max 28%.
What Are Long-Term Capital Gains?
Long-term capital gains (LTCG) are profits from selling capital assets held for more than one year. They receive favorable tax treatment.
2025 Long-Term Capital Gains Tax Rates
| Tax Rate | Single Filers | Married Filing Jointly |
|---|---|---|
| 0% | $0 - $48,350 | $0 - $96,700 |
| 15% | $48,351 - $533,400 | $96,701 - $600,050 |
| 20% | Over $533,400 | Over $600,050 |
Net Investment Income Tax (NIIT)
High-income taxpayers may owe an additional 3.8% NIIT:
- Single: $200,000 MAGI threshold
- MFJ: $250,000 MAGI threshold
- Effective top rate: 20% + 3.8% = 23.8%
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Net Investment Income Tax (NIIT)
The Net Investment Income Tax (NIIT) is an additional 3.8% tax on investment income for individuals with modified adjusted gross income (MAGI) exceeding $200,000 (single) or $250,000 (married filing jointly).
Tax-Loss Harvesting
Tax-loss harvesting is a strategy of selling investments at a loss to offset capital gains or ordinary income, thereby reducing tax liability while maintaining market exposure by purchasing similar (but not substantially identical) investments.
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