What is the capital gains tax rate on assets held for over a year?

The capital gains tax rate on assets held for over a year is categorized into long-term capital gains tax rates, which can be 0%, 15%, or 20%, depending on the taxpayer’s income level. This tiered structure allows for favorable tax treatment to encourage long-term investment.

For instance, individuals in lower income brackets may benefit from a 0% long-term capital gains rate, while middle-income earners typically fall into the 15% category. Higher-income earners might find themselves subject to the 20% rate. This progressive approach is designed to reduce the tax burden on those who are investing their money for longer periods, ultimately aimed at stimulating economic growth through investments.

Understanding these rates is crucial for tax planning and investment strategies, as they can significantly impact the overall tax liability when selling assets that have appreciated in value. The other options suggest fixed or incorrect percentages that do not align with the current tax regulations regarding long-term capital gains.