Short-Term vs. Long-Term
The holding period determines your tax rate. Sell an asset within 12 months of purchase: short-term gain, taxed as ordinary income. Hold for more than 12 months: long-term gain, taxed at 0%, 15%, or 20%. This applies to stocks, bonds, real estate, cryptocurrency, collectibles, and most other capital assets. The incentive is clear — the tax code rewards patience.2025 Long-Term Capital Gains Brackets
For 2025: 0% rate applies to taxable income up to $48,350 (single) / $96,700 (married filing jointly). 15% rate applies from $48,350 to $533,400 (single) / $96,700 to $600,050 (MFJ). 20% rate applies above $533,400 (single) / $600,050 (MFJ). Collectibles (art, coins, antiques) are taxed at a flat 28% regardless of holding period. Qualified small business stock (Section 1202) may be partially or fully excluded.Example: Stock Sale
You bought 100 shares at $50 ($5,000 total) and sell at $80 ($8,000). Your gain is $3,000. If you held for 8 months: $3,000 taxed as ordinary income. At the 24% bracket, you owe $720. If you held for 14 months: $3,000 taxed at the 15% LTCG rate. You owe $450. Holding 6 more months saved you $270 on a $3,000 gain.
Tax Loss Harvesting
You can offset capital gains with capital losses — sell losing positions to reduce your tax bill. If your losses exceed gains, you can deduct up to $3,000 of net losses against ordinary income per year, carrying forward unused losses indefinitely. Watch out for the wash sale rule: if you repurchase a substantially identical security within 30 days, the loss is disallowed.
Net Investment Income Tax (NIIT)
An additional 3.8% tax applies to the lesser of: your net investment income, or the amount by which your MAGI exceeds $200,000 (single) / $250,000 (MFJ). Net investment income includes capital gains, dividends, interest, rental income, and royalties. This means high earners effectively pay 23.8% on long-term gains (20% + 3.8% NIIT).
An additional 3.8% tax applies to the lesser of: your net investment income, or the amount by which your MAGI exceeds $200,000 (single) / $250,000 (MFJ). Net investment income includes capital gains, dividends, interest, rental income, and royalties. This means high earners effectively pay 23.8% on long-term gains (20% + 3.8% NIIT).
Track Investment Gains and Losses
Hivebooks tracks cost basis and holding periods for your investments, making capital gains calculations and tax loss harvesting straightforward.
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