What is the capital gains tax and what are the 2025 rates?

Group 1 - The capital gains tax is applicable on profits from the sale of assets such as homes or stocks, and it varies based on the holding period of the asset [1][2] - Capital gains are defined as profits made from selling an asset at a higher price than its purchase price, excluding unrealized gains [2] - There are two types of capital gains: short-term, taxed at ordinary income rates, and long-term, taxed at lower rates [3][4] Group 2 - Short-term capital gains tax applies to assets held for one year or less, taxed at the same rate as the individual's income [3] - Long-term capital gains tax applies to assets held for over a year, with a maximum rate of 20% expected for 2025 tax filings [4][8] - The capital gains tax rates for 2025 are structured as 0%, 15%, or 20%, depending on the taxpayer's income level [8] Group 3 - Capital gains tax is not limited to stocks; it applies to various capital assets including real estate, bonds, mutual funds, NFTs, cryptocurrency, and collectibles [6] - The tax liability on capital gains is influenced by the duration of asset holding and the taxpayer's income bracket, with higher incomes resulting in higher tax rates [7]