Definition of long-term capital gains

Definition

Capital gains are classified as long-term or short-term. Long-term capital gains are the profits an individual makes from selling assets, such as stock, a business, a house, or land, that were held for more than a year. Short-term capital gains are profits from the sale of assets held for less than a year.

Related terms

More from The Holloway Guide to Equity Compensation

Tax Basics › Kinds of income

Although this topic is not without controversy, the general idea is, if you are selling something you’ve owned for a long time, you can be taxed a lower rate.

All these rates have evolved over time based on economic and political factors, so you can be confident they will change again in the future.

new In 2017, Congress passed the Tax Cuts and Jobs Act (TCJA), which made many changes to tax rates for the 2018 tax year. Long-term capital gains taxes did not change significantly.

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The Holloway Guide to Equity Compensation
Joshua Levy, Joe Wallin, and over 35 contributors
Over 3 hours and 300 linked resources
Stock options, RSUs, job offers, and taxes—a detailed reference, including hundreds of resources, explained from the ground up and made to be improved over time.