What are capital gains and how are they taxed?

A capital gain is the profit from selling a capital asset like stocks, real estate, or cryptocurrency for more than you paid. Short-term gains (assets held one year or less) are taxed as ordinary income at your regular bracket rate. Long-term gains (held over one year) are taxed at preferential rates of 0%, 15%, or 20% depending on your taxable income, making the holding period a key planning factor.