How does capital gains tax work?

TaxWarren TeamPublished April 25, 2026

Quick answer

You owe capital gains tax when you sell an asset for more than you paid. Long-term gains (held over 1 year) are taxed at 0%, 15%, or 20% based on income. Short-term gains (held one year or less) are taxed at your ordinary income rate.

Long-term capital gains brackets for 2025.

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