Short-term capital gains tax is basically a tax on profits from the sale of an asset held for 1 year or less than that.

When it comes to the long-term capital gains tax then it is basically a tax on profits from the sale of an asset held for more than a year.

The short-term capital gains tax rate equals your normal income tax rate aka your tax bracket.

And the long-term capital gains tax rate is 0%, 15% or 20% depending on your taxable income and filing status.

The long-term capital gains tax are generally lower than short-term capital gains tax rates.

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