Introduction
The capital gains tax is essentially a federal tax on the profits of corporations that do business within the United States. A capital gain is made when a capital asset is sold for higher than its original purchasing price.
There are two types of capital gains taxes: short-term and long-term taxes. Short-term capital gains tax is taxed in a similar manner to ordinary income taxes, up to 37% of total profit in 2022 depending on what tax bracket you fall under. Long-term capital gains taxes on the other hand are derived from assets held for longer than one year before they are sold off. They are taxed on graduated thresholds of 0%, 15%, or 20% of total profit, generally being taxed at 15% and lower for most taxpayers who report long-term capital gains. Therefore, a seller is able to minimize their capital gains tax by holding onto their asset for a year or more before selling it.
The federal government has also passed legislation on capital gains tax, the most recent being the Prohibiting Unrealised Capital Gains Tax, which bars federal officials from taxing capital gains that were not sold or otherwise disposed of.
Check the data in the charts to see how capital gains taxes vary from state to state.
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