Tax & regulation
What is the difference between Short-Term Capital Gains and Long-Term Capital Gains tax rates?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
Short-term capital gains apply to assets held one year or less and are taxed at ordinary income tax rates, while long-term gains apply to assets held over one year at generally lower preferential rates.
How it works
The holding period distinction can significantly affect after-tax returns, making the one-year threshold an important consideration for investors deciding when to realize gains.
An example
An investor selling a stock held for 13 months may pay a lower federal long-term capital gains rate compared to selling the same stock at 11 months held.
Risk & limitations
Tax rates and brackets change periodically and vary by income level and jurisdiction; this is general information and not a substitute for advice from a qualified tax professional. This describes U.S. federal rules only; Canadian and other non-U.S. investors are subject to different tax/regulatory regimes (e.g., CRA rules, TFSA/RRSP treatment) and should consult a local tax professional.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.