Capital gains tax is the tax you may owe on a profit you make when you sell a capital asset (like stocks, real estate, or a business interest) for more than your cost basis (generally what you paid, adjusted for certain items).
In the U.S., it’s commonly split into:
Short-term capital gains (asset held 1 year or less) — taxed at ordinary income tax rates.
Long-term capital gains (held more than 1 year) — often taxed at preferential rates compared with ordinary income.
