Finance Maxxing
Capital Gains & Investments
Short-Term Capital Gains (STCG)
Gains on assets held one year or less, taxed as ordinary income.
Short-term gains are taxed at your ordinary income tax rates — the same rates as wages and salary.
STCG vs. LTCG Comparison
| Short-Term | Long-Term | |
|---|---|---|
| Holding period | ≤ 12 months | > 12 months |
| Federal rate | 10%–37% | 0%–20% |
| + NIIT | +3.8% if applicable | +3.8% if applicable |
| Max federal rate | 40.8% | 23.8% |
Tax Savings from Holding Longer
For a high earner (37% bracket + NIIT):
| $100,000 gain | STCG | LTCG | Savings |
|---|---|---|---|
| Federal tax | $40,800 | $23,800 | $17,000 |
| + State (e.g., CA 13.3%) | $13,300 | $13,300 | $0 |
| Total | $54,100 | $37,100 | $17,000 |
Strategy: If you're close to the 12-month mark, it often pays to wait a few more days to qualify for LTCG rates.
Sources
Related Terms
More in Capital Gains & Investments
Long-Term Capital Gains (LTCG)
Gains on assets held over one year, taxed at preferential rates.
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.