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

It comes down to how long you held the investment. If you sell something you've owned for one year or less, the profit is a short-term capital gain taxed at your ordinary income rate – the same brackets as your salary, up to 37%. Hold for more than one year and it becomes a long-term gain, taxed at preferential rates of 0%, 15%, or 20% depending on your taxable income. For most middle-income investors that's 15%, a big discount versus ordinary rates. The lesson: when you're close to the one-year mark and sitting on a gain, waiting a few extra days to cross into long-term territory can meaningfully cut your tax bill. Estimate the difference with wealthserene.com/tools/capital-gains before you sell.