Understanding Capital Gains and Losses

When you sell an investment or property for more than you paid, you realize a capital gain. When you sell for less, you realize a capital loss. Understanding how these are taxed can help you make smarter investment decisions.

Types of Capital Gains

Capital gains are classified as either short-term or long-term:

• Short-term: Assets held for one year or less are taxed at your ordinary income tax rates (up to 37%)


• Long-term: Assets held for more than one year are taxed at preferential rates: 0%, 15%, or 20% depending on your income

Capital Gains Tax Rates (2025)

For long-term capital gains:

• 0%: Single filers with taxable income up to $47,025


• 15%: Single filers with taxable income $47,026 to $518,900


• 20%: Single filers with taxable income over $518,900

Using Capital Losses

Capital losses can offset capital gains dollar-for-dollar. If your losses exceed your gains, you can deduct up to $3,000 of excess losses against ordinary income. Remaining losses can be carried forward to future years.

Tax-Loss Harvesting

Tax-loss harvesting involves selling investments at a loss to offset gains, potentially reducing your tax liability. This strategy requires careful planning to avoid wash sale rules.

Our investment tax specialists can help you develop strategies to minimize capital gains taxes and maximize your after-tax returns.