What is the 2023 Capital Gains Tax Rate?

The 2023 capital gains tax rate is the amount of tax that applies to profits from the sale of stocks, mutual funds, or other capital assets held for more than a year. The tax rates for short-term gains are 10%, 12%, 22%, 24%, 32%, 35% and 37%. Long-term investors benefit from this rate, as it allows an asset to increase in value over time without being taxed until the point of sale. Taxpayers may also be subject to the Net Investment Income Tax (NIIT), which adds a 3.8% overtax to certain investment sales by individuals, inheritances and trusts above a set threshold.

This credit offsets the tax liability and can even generate a refund. An important exception to a reduced long-term capital gain rate applies to collectible assets, such as antiques, works of art, coins, or even valuable wine vintages. Tax planning opportunities exist to minimize taxes paid, but since the 0% bracket is relatively low, your earnings are likely to extend to other categories. Upgrading occurs when people are pushed to higher tax brackets or when the value of credits and deductions is reduced due to inflation, rather than any increase in real income.

A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer's tax bill directly. Capital gains distributions (also called capital gains dividends) paid to you by mutual funds (or other regulated investment companies) and real estate investment trusts (REITs) are also subject to previous CGT rules. If you use capital losses to reduce your taxable income as part of tax planning, consider the “laundering” rule that will penalize if you purchase similar or substantially identical shares or securities before a 30-day waiting period. At the end of the year, taxpayers may receive a capital gains tax impact when they see their 1099 investment forms from their mutual fund provider. This is sometimes referred to as a “hidden tax”, as it leaves taxpayers less well-off due to higher costs and “increased tranches”, while increasing the government's purchasing power. The IRS allows you to match your profits and losses for a given year to determine your net capital gain or loss.

The Tax Foundation is a 501 (c) (educational) nonprofit organization and cannot answer specific questions about your tax situation or help you with the tax filing process.

Jacob Macdonnell
Jacob Macdonnell

Incurable zombieaholic. Passionate beer maven. Zombie trailblazer. Hipster-friendly coffee fanatic. Infuriatingly humble foodaholic.