Short-Term Capital Gains Rates for 2025

What Is Short-Term Capital Gains Tax?

The capital gains tax is a type of tax you pay when you sell an asset for more than what you paid for it. The tax applies to the profit portion of the sale. You pay the short-term capital gains tax rate if you held the asset for less than a year before selling it.

Example: Let's say you buy 100 shares of a stock for $10,000 and sell them six months later for $15,000. You'd pay the short-term capital gains tax on the $5,000 you earned in profit.

Short-term capital gains are taxed as regular income, so you'll pay your ordinary income tax rate. These tax rates range from 10% to 37% and depend on your income and filing status. If you're a single filer with $50,000 in taxable income (putting you in the 22% tax bracket), then you'd owe $1,100 on your stock sale from the example above.

Long-Term Capital Gains Tax

Long-term capital gains tax rates—which apply when you own the asset for more than a year before selling it—are more favorable. The tax rates are 0%, 15% and 20%, and per the IRS, most individuals pay 15% or less. Continuing the above example where you sell shares at a $5,000 profit, your tax bill would drop to $750 if you hold the stocks for at least a year and sell them at the same price.

Learn more: How to Know if You Have to Pay Capital Gains Tax

Short-Term Capital Gains Tax Rates for 2025

Short-term capital gains are treated as regular income, so your tax rate depends on your income tax bracket. Here are the short-term capital gains rates for the 2025 tax year:

How to Reduce Short-Term Capital Gains Taxes

It may be possible to lower your tax bill with the following strategies:

• Hold your investments longer. If you own the asset for at least a year before selling it, then you pay the lower long-term capital gains tax rate.
• Harvest your tax losses. You can offset up to $3,000 in capital gains by selling some of your investments at a loss.
• Open a tax-advantaged account. A tax-advantaged account provides tax benefits to encourage people to save. Depending on the type of account you open, you can postpone your tax bill or avoid paying taxes on capital gains or dividends.

Learn more: Should I Sell My Stocks?

The Bottom Line

Short-term capital gains tax rates apply when you hold an asset for less than a year before selling it. This type of gain is taxed as regular income, so you can check your tax bracket to see how much tax you owe. The tax rates range from 10% to 37%.

If you're looking for ways to lower your tax bill, consider holding on to the asset for at least a year before selling. Then you'll pay the long-term capital gains tax rates, which are lower. It's also possible to realize tax savings in a tax-advantaged account or offset some of your capital gains through any losses you incur.