Question 1

What is the difference between short-term and long-term capital gains?

Accepted Answer

Assets held over 12 months qualify for long-term rates of 0%, 15%, or 20% depending on income. Assets held 12 months or less are short-term gains taxed as ordinary income — up to 37% federally. Holding past the one-year mark can cut your tax bill roughly in half.

Question 2

What are the 2025 long-term capital gains brackets?

Accepted Answer

For single filers: 0% up to $48,350 taxable income, 15% up to $533,400, and 20% above. Married filing jointly: 0% up to $96,700, 15% up to $600,050, 20% above. High earners may also owe the 3.8% Net Investment Income Tax.

Question 3

How can I reduce capital gains tax?

Accepted Answer

Hold assets over one year for long-term rates; harvest losses to offset gains (plus $3,000 of ordinary income annually); use tax-advantaged accounts; time sales for lower-income years; and for real estate, the primary-residence exclusion shelters $250k ($500k married) of gain.

Question 4

Do I pay capital gains tax on my home sale?

Accepted Answer

Usually not — the Section 121 exclusion lets you exclude up to $250,000 of gain ($500,000 married filing jointly) on a primary residence you owned and lived in for 2 of the last 5 years. Gains beyond the exclusion are taxed at long-term rates.

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