Series 50: Short- And Long-Term Capital Gains

Short- and Long-Term Capital Gains

When an investor sells a security for more than its adjusted cost basis, the investor will have to pay a capital gains tax. Capital gains taxes are due on gains made in municipal securities. If an investor holds a security for one year or less, the IRS considers the gain or loss to be short-term, and when the investor holds the security for over one year, the IRS considers the gain or loss to be long-term. Short-term capital gains are taxed at the taxpayer’s ordinary income rate, while long-term gains are taxed at the lower capital gains rate (0% to 20%)