Skip to content
GetProfitable
Search
Dictionary

Long-term capital gain

A gain on an asset held more than one year, taxed in the United States at preferential rates well below ordinary income rates, with an additional net investment income tax at higher incomes.

Preferential brackets apply, with a zero rate band at low taxable income and higher bands above it, plus a net investment income surtax for higher earners. The exact thresholds are indexed annually.

Very little of an active trader's income qualifies. Day and swing trading produces short-term-capital-gain, and the main long-term exposure for most traders is a core investment book or company equity. section-1256 contracts are the exception, because the sixty-forty-tax-treatment gives part long-term character regardless of holding period.

Long-term losses offset long-term gains first, then short-term, with the netting rules driving the order on schedule-d.

General information for the United States, not tax advice. Rules change and depend on your circumstances; speak to a qualified tax professional.

Related: short-term-capital-gain, holding-period, sixty-forty-tax-treatment, schedule-d, qualified-dividend-holding-period

Educational only, not advice. Spotted an error? Post in Site Feedback.