What is the capital gains tax rate for assets held longer than one year?

The capital gains tax rate for assets held longer than one year is classified into three potential rates: 0%, 15%, or 20%. This tiered structure is designed to reflect the income level of an individual taxpayer. For instance, individuals in lower income brackets may benefit from a 0% tax rate on long-term capital gains, while those with higher incomes may be subject to the 15% or 20% rates.

This system serves to incentivize long-term investment and aligns with the federal tax policy aimed at promoting economic growth by rewarding those who invest and hold onto assets over time. The specific rate that applies will depend on the taxpayer’s overall taxable income in the year the gains are realized, along with the nature of the asset involved in the transaction.