What Is a Long-Term Capital Gain?

A long-term capital gain is profit from selling an asset you held for more than one year. The IRS taxes these gains at preferential rates: 0%, 15%, or 20%, depending on your income — much lower than ordinary income tax rates. Most middle-income taxpayers pay 15% on long-term gains. Holding an asset just a little longer to cross the one-year mark can meaningfully reduce your tax bill. Report these on Schedule D.