What is the difference between short-term and long-term capital gains rates?

Short-term capital gains are profits from assets held 12 months or less, taxed at ordinary income rates that can reach 37%. Long-term capital gains on assets held more than 12 months are taxed at 0% (up to ~$47K income for single filers in 2024), 15% (most earners), or 20% (very high earners). Waiting one extra day past the one-year mark can significantly reduce your tax bill.