Capital Gains Tax: Long and Short-Term Rates for 2024-2025

Capital gains are the profits from the sale of assets. They can be subject to either short-term or long-term tax rates.

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Updated Aug 14, 2025 9:53 a.m. PDT · 4 min read

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If you own investments or regularly sell assets, it's important to understand the potential tax implications.

What are capital gains?

Most items people own are considered capital assets. This can include investments, such as stocks, bonds, cryptocurrency or real estate, as well as personal and tangible items, such as cars or boats.

When you sell a capital asset for a higher price than its original value, the money you make on that sale is called a capital gain. And when you sell an asset for less than its original value, the money you lose is known as a capital loss.

The difference between your capital gains and your capital losses is your net profit. For example, if you sold a stock for a $10,000 profit this year and sold another at a $4,000 loss, your net capital gain is $6,000.

» Ready to crunch the numbers? Calculate your capital gains tax

What is capital gains tax?

Capital gains taxes are owed on profits made from the sale of assets. How much you pay depends on what you sold, how long you owned it before selling, your taxable income and your filing status. Capital gains can be subject to either short-term tax rates or long-term tax rates.

Some exceptions:

High-earning individuals may also need to account for the net investment income tax (NIIT), an additional 3.8% tax that can be triggered if your income exceeds a certain limit.

Long-term capital gains on so-called “collectible assets” can be taxed at a maximum of 28%. This includes items such as coins, precious metals, antiques and fine art. Short-term gains on such assets are taxed at the ordinary income tax rate
.

What is long-term capital gains tax?

Profits from the sale of an asset held for more than a year are subject to long-term capital gains tax. The long-term capital gains tax rates are 0%, 15% or 20%, depending on taxable income and filing status. Per the IRS, most people pay no more than 15%.

What is short-term capital gains tax?

Short-term capital gains tax is a tax on profits from the sale of an asset held for one year or less. Short-term capital gains are treated as regular income and taxed according to ordinary income tax brackets: 10%, 12%, 22%, 24%, 32%, 35% or 37%.

» Learn more: See which tax brackets you're in

Nerd tip

Capital gains taxes apply to assets that are "realized," or sold. This means that the returns on stocks, bonds or other investments purchased through and then held within a brokerage are considered unrealized and not subject to capital gains tax.

But one important caveat is investments that produce dividends. Even if you haven't sold a dividend stock or other dividend investment, the income you receive from the dividends may be considered a capital gain.

Assets held within tax-advantaged accounts — such as 401(ks) or IRAs — aren't subject to capital gains taxes while they remain in the account. Instead, you may pay regular income taxes when it comes time to make a qualified withdrawal, depending on what type of account it is.

» Ready to see the whole picture? Estimate your refund or bill with NerdWallet's tax calculator

Capital gains tax rate 2025

The following rates and brackets apply to long-term capital gains on assets sold in 2025, which are reported on taxes filed in 2026.

Tax rate	Single	Married filing jointly	Married filing separately	Head of household
0%	$0 to $48,350	$0 to $96,700	$0 to $48,350	$0 to $64,750
15%	$48,351 to $533,400	$96,701 to $600,050	$48,350 to $300,000	$64,751 to $566,700
20%	$533,401 or more	$600,051 or more	$300,001 or more	$566,701 or more
Short-term capital gains are taxed as ordinary income according to federal income tax brackets.

» Next steps: Try our capital gains tax calculator

Capital gains tax rate 2024

The following rates and brackets apply to long-term capital gains on assets that were sold in 2024, which were reported on taxes filed in April 2025 (or by October 15, 2025, with an extension).

Tax rate	Single	Married filing jointly	Married filing separately	Head of household
0%	$0 to $47,025	$0 to $94,050	$0 to $47,025	$0 to $63,000
15%	$47,026 to $518,900	$94,051 to $583,750	$47,026 to $291,850	$63,001 to $551,350
20%	$518,901 or more	$583,751 or more	$291,851 or more	$551,351 or more
Short-term capital gains are taxed as ordinary income according to federal income tax brackets.

Still need to file? See which tax software can help with investing income

How to reduce or avoid capital gains taxes

1. Hold on

Whenever possible, hold an asset for longer than a year so you can qualify for the long-term capital gains tax rate, because it's significantly lower than the short-term capital gains rate for most assets. Our capital gains tax calculator shows how much that could save.

» Dive deeper: Read more about taxes on stocks, and how to pay less

2. Use tax-advantaged accounts

These include 401(k) plans, individual retirement accounts and 529 college savings accounts, in which the investments grow tax-free or tax-deferred. That means you don’t have to pay capital gains tax if you sell investments within these accounts. Roth IRAs and 529 accounts, in particular, have big tax advantages. If you follow the account rules, you can withdraw money from those accounts tax-free. With traditional IRAs and 401(k)s, your money grows tax-deferred, then you pay taxes when you take distributions in retirement.

3. Rebalance with dividends

Rather than reinvest dividends in the investment that paid them, rebalance by putting that money into your underperforming investments. Typically, you'd rebalance by selling securities that are doing well and putting that money into those that are underperforming. But using dividends to invest in underperforming assets will allow you to avoid selling strong performers, and thus avoid the capital gains that would come from that sale.

» Learn more about the dividend tax rate and how it works

4. Look into tax-loss harvesting

The IRS taxes your net capital gain, which is simply your total long- or short-term capital gains (investments sold for a profit) minus the corresponding long- or short-term total capital losses (investments sold at a loss). The strategic practice of selling off specific assets at a loss to offset gains is called tax-loss harvesting. This strategy has many rules and isn't right for everyone, but it can help to reduce your taxes by lowering the amount of your taxable gains.

If your net capital loss exceeds your net capital gains, you can also offset your ordinary income by up to $3,000 ($1,500 for those married filing separately). Any additional losses can be carried forward to future years to offset capital gains or up to $3,000 of ordinary income per year.

5. Use the home sales exclusion

If you sold a house the previous year, you may be able to exclude a portion of the gains from that sale on your taxes. To qualify, you must have owned your home and used it as your main residence for at least two years in the five-year period before you sell it. You also must not have excluded another home from capital gains in the two-year period before the home sale. If you meet those rules, you can exclude up to $250,000 in gains from a home sale if you’re single, and up to $500,000 if you’re married filing jointly.

» Learn more about how capital gains on home sales work

6. Consider a robo-advisor

Robo-advisors manage your investments for you automatically, and they often employ smart tax strategies, including tax-loss harvesting, as a part of the service.

» Ready to get started? See our picks for the best robo-advisors

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