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.