Short-Term vs. Long-Term Capital Gains: Tax Rates, Rules & How to Save
Short-term capital gains come from assets held ≤ 12 months and are taxed as ordinary income; long-term gains come from assets held > 12 months and get lower, preferential rates.
People panic-sell crypto or RSUs in under a year, thinking quick wins beat slow growth, then get shocked by tax software showing 32% instead of 15%. The calendar, not the ticker, decides the bill.
Key Differences
Short-term rates mirror your top bracket—up to 37%. Long-term rates max at 20% (plus 3.8% surtax for high earners). Holding periods reset if you rebuy within 30 days via wash-sale rules.
Which One Should You Choose?
Choose long-term when possible: use tax-loss harvesting in December, set calendar reminders at 365 days, and stagger RSU vesting to push sales into year two.
Examples and Daily Life
Sell Apple shares after 11 months → taxed like salary. Hold 13 months → pay 0%, 15%, or 20% depending on total income. A $20k gain can save $3,400 just by waiting 60 extra days.
Does day trading ever qualify for long-term rates?
No. Each buy-sell round trip resets the clock; positions must sit untouched for 12+ months.
Can I offset short-term gains with long-term losses?
Yes. Losses erase gains dollar-for-dollar first, then up to $3k of ordinary income yearly.