Capital Gains Tax 2024: Rates, Rules, and How to Reduce What You Owe

<p>A capital gain occurs when you sell an asset for more than you paid. The IRS taxes gains differently based on your <strong>holding period</strong>.</p><h2>Short-Term Capital Gains (Held 1 Year or Less)</h2><p>Taxed as ordinary income at your regular tax bracket rate — as high as 37%.</p><h2>Long-Term Capital Gains (Held More Than 1 Year)</h2><p>Preferential rates apply for 2024:</p><ul><li><strong>0%</strong> — Single income up to $47,025 / MFJ up to $94,050</li><li><strong>15%</strong> — Single up to $518,900 / MFJ up to $583,750</li><li><strong>20%</strong> — Above those thresholds</li></ul><h2>Net Investment Income Tax (NIIT)</h2><p>High earners (single over $200,000 / MFJ over $250,000) also pay an additional <strong>3.8% NIIT</strong> on investment income under the Affordable Care Act.</p><h2>Strategies to Reduce Capital Gains Tax</h2><ul><li><strong>Tax-loss harvesting:</strong> Sell losing investments to offset gains</li><li><strong>Hold assets longer than 1 year</strong> for the preferential rate</li><li><strong>Qualified Opportunity Zone investments:</strong> Defer and potentially reduce gains</li><li><strong>Donate appreciated assets</strong> to charity — no capital gains, full deduction</li></ul><p><em>Source: IRS Topic No. 409; IRS Rev. Proc. 2024-40</em></p>