Capital Gains Tax Strategies
Taxes can eat up a huge portion of your investment returns. Understanding the difference between Short-Term and Long-Term capital gains is the first step to keeping more of what you earn.
The One-Year Rule
The magic number is 366 days. If you hold an asset for at least a year and a day, you qualify for long-term capital gains rates (0%, 15%, or 20%), which are significantly lower than ordinary income tax rates (up to 37%).
Tax Loss Harvesting
Offset Your Gains
Did you lose money on a different investment? You can use those losses to offset your gains dollar-for-dollar. If your losses exceed your gains, you can even use up to $3,000 of excess loss to offset your regular income.
Net Investment Income Tax (NIIT)
High earners may face an additional 3.8% tax on investment income if their modified adjusted gross income (MAGI) exceeds certain thresholds ($200k for single, $250k for married). This calculator estimates standard capital gains but verify if NIIT applies to you.