Short-Term Capital Gains

Tax Planning
Updated Apr 2026

Profits from selling assets held for one year or less, taxed at ordinary income rates.

Tax laws change annually and vary by country. The information on this page is for educational purposes only. Always verify figures with current official sources (IRS, HMRC, CRA, ATO) and consult a qualified tax professional before making any tax-related decision.

What is Short-Term Capital Gains?

Short-term capital gains (STCG) are profits from selling assets that were held for one year or less. Unlike long-term capital gains, short-term gains receive no preferential tax treatment — they are taxed at the taxpayer's ordinary income rate (up to 37% federally). This makes the one-year holding period threshold a critical tax planning boundary: selling just one day too soon can substantially increase the tax cost of a gain. Short-term gains are common among active traders, day traders, and investors who sell positions within the year. Losses from short-term positions can offset short-term gains dollar-for-dollar and can also offset long-term gains.

Example

Example

An investor in the 32% tax bracket sells a stock at a $10,000 profit after holding it 10 months (short-term). They owe $3,200 in tax. Had they held just two more months (making it long-term), the tax would have been $1,500 (15% LTCG rate) — a savings of $1,700 simply for waiting.

Source: IRS — Topic 409: Capital Gains and Losses