What is the tax rate for Long-Term Capital Gains?

The tax rate for long-term capital gains primarily depends on an individual's income level, but for many taxpayers, it is indeed 15%. Long-term capital gains are typically from the sale of assets held for more than one year and benefit from lower tax rates compared to ordinary income rates, which can be as high as 37%.

The applicable rates for long-term capital gains can be 0%, 15%, or 20%, depending on the taxpayer's income. A significant portion of individuals falls into the 15% tax rate bracket. Specifically, for single filers in 2023, the long-term capital gains rate of 15% applies to individuals with taxable income above a certain threshold, but below the upper limit where the 20% rate kicks in.

It is also worth noting that some individuals may qualify for a 0% rate if their income is below a certain threshold, while a small fraction may fall into the 20% tax bracket due to higher income levels. The 15% rate serves as a middle ground for the majority of taxpayers, making it the most common rate applied to long-term capital gains.