Capital Gains Tax

A capital gain is the profit from selling an asset, such as a stock or bond, for more than you paid. The gain is taxed only when you sell and collect that profit, not while the asset is still in your account.

Capital gains tax is the tax on that realized profit. Short-term gains (held one year or less) are usually taxed as regular income, while long-term gains (held more than one year) are taxed at lower rates.