A capital gain is the profit from selling an investment for more than its cost basis. Short-term gains (held one year or less) are taxed at ordinary income rates up to 37%. Long-term gains (held more than one year) get preferential rates: 0%, 15%, or 20% depending on taxable income. At low-to-moderate incomes, long-term gains can be entirely tax-free — for 2026, the 0% bracket extends to $48,350 single / $96,700 married joint. The wash-sale rule disallows tax-loss harvesting losses if you repurchase substantially identical securities within 30 days. Strategic tax-loss harvesting and long-term holding dramatically improve after-tax returns.
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August 22, 2026 · Aditya Gupta
Investing
Related terms
401(k)
A 401(k) is an employer-sponsored retirement plan where employees contribute pre-tax salary that grows tax-deferred until withdrawal. The…
Active Management
Active management is the attempt to outperform a benchmark through stock selection, sector rotation, market timing, or any…
Alpha
Alpha is excess return relative to a benchmark, adjusted for risk (beta). Positive alpha means an investment outperformed…
Asset Allocation
Asset allocation is the percentage split of your portfolio across asset classes — typically stocks, bonds, and cash,…
Backdoor Roth
The Backdoor Roth is a strategy for high earners (above the Roth IRA income limit) to contribute to…
Beta
Beta measures a stock's volatility relative to the overall market (S&P 500 = beta of 1). Stocks with…
