Capital gain

A capital gain is the profit from selling property you hold as an investment, such as shares of stock, for more than your cost basis, generally what you paid. Selling for less gives a capital loss. Buy $1,000 of shares, sell for $1,300, the gain is $300.

A price rise while you still hold is an unrealized gain and carries no federal tax; the sale is the tax event. Holding more than one year makes a gain long-term, usually taxed federally for 2026 at 0, 15 or 20 percent, depending on where your income falls. One year or less makes it short-term, taxed as ordinary income, like wages.

When losses exceed gains, for 2026 up to $3,000 a year ($1,500 if married filing separately) can reduce other income on your federal return, and the rest carries forward.