Finance Maxxing
Capital Gains & Investments
Long-Term Capital Gains (LTCG)
Gains on assets held over one year, taxed at preferential rates.
Long-term capital gains on assets held more than 12 months are taxed at preferential rates: 0%, 15%, or 20%.
2025 LTCG Brackets
| Taxable Income (Single) | Rate |
|---|---|
| Up to ~$48,350 | 0% |
| $48,351 – ~$533,400 | 15% |
| Over ~$533,400 | 20% |
How LTCG "Stacks" on Ordinary Income
LTCG fills brackets on top of your ordinary taxable income:
Ordinary taxable income: $80,000 (fills 10%, 12%, 22% brackets)
LTCG: $50,000 (starts in 15% LTCG bracket)
If ordinary income is low enough, some LTCG may fall in the 0% bracket — meaning you pay zero tax on those gains.
Total Tax on LTCG
The maximum federal rate on LTCG, including NIIT:
20% (LTCG) + 3.8% (NIIT) = 23.8% federal
+ State tax (0%–13.3%)
= Up to ~37% combined
Most states tax capital gains as ordinary income. Exceptions: WA has a separate 7% capital gains tax on gains over $250K.
Sources
More in Capital Gains & Investments
Short-Term Capital Gains (STCG)
Gains on assets held one year or less, taxed as ordinary income.
Holding Period
How long you held an asset — determines LTCG vs. STCG.
Net Investment Income Tax (NIIT)
3.8% surtax on investment income for high earners.
Cost Basis
Original purchase price used to calculate gain or loss.
Capital Loss Deduction
Losses offset gains; up to $3,000/yr against ordinary income.
Tax-Loss Harvesting
Selling investments at a loss to offset gains.
Wash Sale Rule
Disallows loss if you repurchase same security within 30 days.
Qualified Dividends
Dividends taxed at LTCG rates instead of ordinary rates.
Stepped-Up Basis
Inherited assets reset cost basis to date-of-death value.