concept

long-term capital gains

Also known as: long-term gains

Facts (21)

Sources

How tax loss harvesting can help improve your investment returns troweprice.com T. Rowe Price 4 facts

claimOffsetting short-term capital gains is particularly valuable because tax rates on short-term gains are generally higher than those on long-term gains.

measurementIn a hypothetical scenario, two single filers earning $120,000 per year with identical portfolios (each with $50,000 in long-term capital gains and $10,000 in short-term gains) were compared. The filer who harvested $20,000 in losses (a $15,000 mutual fund loss and a $5,000 stock loss) reduced their tax bill by $3,450 compared to the filer who did not harvest losses.

perspectiveFor investors in low-income years, it may be more beneficial to harvest gains free of tax rather than to harvest losses, due to the 0% federal income tax rate on long-term capital gains for certain income thresholds.

measurementIn 2025, the 0% federal income tax rate on long-term capital gains applies to single filers with taxable income below $48,350 and married joint filers with taxable income below $96,700.

Wealthfront Classic Portfolio Investment Methodology White Paper research.wealthfront.com Wealthfront Mar 9, 2026 3 facts

claimIncome sources such as dividends, interest, and short-term capital gains are taxed at ordinary income rates, whereas qualified dividends and long-term capital gains are taxed at lower long-term capital gain rates.

claimIn a taxable account, the cost basis of investments increases over time as the net-of-tax amount of income distributions is reinvested, and gains relative to this cost basis are taxed at long-term capital gains rates upon withdrawal, provided the investment was held for at least one year.

claimQualified dividends are a specific type of dividend that may be taxed at lower, long-term capital gains rates rather than ordinary income rates.

Capital Gains and Tax Loss Harvesting Explained - Mercer Advisors merceradvisors.com Mercer Advisors Oct 15, 2025 2 facts

procedureThe process for netting capital gains and losses on tax returns involves four scenarios: (1) If both net short-term and net long-term gains exist, both are taxed at their respective rates. (2) If both net short-term and net long-term losses exist, the losses are combined, up to $3,000 can be deducted against ordinary income, and the remainder is carried forward to future tax years. (3) If there is a net short-term gain and a net long-term loss, the long-term loss offsets the short-term gain; if the loss exceeds the gain, up to $3,000 can be deducted against ordinary income, otherwise the remaining gain is taxed at the ordinary income rate. (4) If there is a net short-term loss and a net long-term gain, the short-term loss offsets the long-term gain; if the loss exceeds the gain, up to $3,000 can be deducted against ordinary income, otherwise the remaining gain is taxed at long-term capital gain rates.

measurementLong-term capital gains are profits from assets held for more than one year, and these gains are taxed at preferential rates of 0%, 15%, or 20%, depending on the investor's taxable income.

Wealthfront Tax-Loss Harvesting - Methodology research.wealthfront.com Wealthfront Jul 1, 2025 2 facts

claimInvestment losses are more valuable when used to offset income rather than long-term capital gains because income is taxed at a higher rate than long-term capital gains.

procedureHarvested tax losses can be used to offset short-term capital gains, long-term capital gains, and ordinary income.

14 Tax Saving Strategies to Minimize Your Expenses edelmanfinancialengines.com Edelman Financial Engines Jan 5, 2026 2 facts

claimLong-term capital gains are currently taxed at preferential tax rates.

claimLong-term capital gains are taxed at varying rates based on the taxpayer's income level.

Advanced Tax Management Strategies | Build & Preserve Wealth ptcpas.com PTC CPAs & Advisors 2 facts

measurementLong-term capital gains are taxed at 15-20% for high earners, whereas short-term capital gains are taxed as ordinary income at rates up to 37%.

claimAn investor holding $50,000 in appreciated stock for 11 months can potentially save over $10,000 in taxes by waiting one month to sell, thereby qualifying for preferential long-term capital gains rates instead of ordinary income rates.

The Importance of Macroeconomic Indicators - Learning Spotlight wtwealthmanagement.com WT Wealth Management Feb 11, 2026 1 fact

claimShort-term and long-term capital gains are subject to capital gains tax.

Structuring Emergency Funds for Safety and Liquidity - LinkedIn linkedin.com Value Research Mar 11, 2026 1 fact

claimEquity Mutual Funds have historically provided a 10–14% CAGR over periods exceeding 10 years and offer tax efficiency (Long Term Capital Gains up to ₹1 Lakh are tax-free), but they are market-linked and require patience and risk tolerance.

Tax Loss Harvesting Rules: What High-Income Investors Need To ... truewealthdesign.com True Wealth Design 5 days ago 1 fact

measurementFor high-income households, long-term capital gains are generally taxed at 20% federally, plus a 3.8% Net Investment Income Tax, often resulting in a marginal tax impact of approximately 23.8% before state taxes.

How to Help Reduce Your Taxes Using Tax-Loss Harvesting marketinsights.citi.com Citi 1 fact

procedureWhen offsetting capital gains and losses, investors must first offset short-term losses against short-term gains, then long-term losses against long-term gains, before offsetting any remaining excess between the two categories.

Three ways to extend tax benefits of a loss harvesting strategy privatebank.jpmorgan.com J.P. Morgan Private Bank Nov 18, 2025 1 fact

measurementThe maximum federal long-term capital gains tax rate is 20%, plus a 3.8% Medicare surtax.

Tax-loss harvesting explained | Vanguard investor.vanguard.com Vanguard 1 fact

claimLong-term capital gains can only be offset by long-term capital losses, and short-term capital gains can only be offset by short-term capital losses.