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StockCram is not a broker-dealer, investment adviser, or financial institution. All content is for educational and informational purposes only and should not be construed as personalized investment advice. Consult a qualified financial professional before making investment decisions. Past performance does not guarantee future results.Simple Definition
Profits on investments held less than 1 year. Taxed as regular income.
Why It Matters
Short-term gains are taxed at your income tax rate - potentially 37% for high earners vs 15-20% for long-term. Day traders and frequent traders pay significantly more in taxes than buy-and-hold investors.
Key Points
- Taxed at ordinary income rates: 10%, 12%, 22%, 24%, 32%, 35%, or 37%
- The 1-year clock starts the day after you buy (buy Jan 1, sell Jan 2 next year = long-term)
- Active trading can easily double your tax burden compared to holding long-term
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Capital Gains Explained
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Common Questions
Profits on investments held less than 1 year. Taxed as regular income. Short-term gains are taxed at your income tax rate - potentially 37% for high earners vs 15-20% for long-term. Day traders and frequent traders pay significantly more in taxes than buy-and-hold investors.
Short-term gains are taxed at your income tax rate - potentially 37% for high earners vs 15-20% for long-term. Day traders and frequent traders pay significantly more in taxes than buy-and-hold investors.
Taxed at ordinary income rates: 10%, 12%, 22%, 24%, 32%, 35%, or 37%
The 1-year clock starts the day after you buy (buy Jan 1, sell Jan 2 next year = long-term)
Active trading can easily double your tax burden compared to holding long-term