Trading Tax Basics — Capital Gains Explained
Trading gains in the US are taxed as capital gains. Short-term (held < 1 year): taxed at ordinary income rates (10-37%). Long-term (held > 1 year): preferential rates (0%, 15%, or 20%). Day traders generate primarily short-term gains, which can result in surprisingly high tax bills. Plan accordingly — withhold or pay quarterly estimated taxes.
Trading gains in the US are taxed as capital gains. Short-term (held < 1 year): taxed at ordinary income rates (10-37%). Long-term (held > 1 year): preferential rates (0%, 15%, or 20%). Day traders generate primarily short-term gains, which can result in surprisingly high tax bills. Plan accordingly — withhold or pay quarterly estimated taxes.
Short-term vs long-term gains
This section covers short-term vs long-term gains. For the practical framework, see our Trading Taxes hub and our blog for related analyses. Read on for context-specific guidance.
How holding period is calculated
This section covers how holding period is calculated. For the practical framework, see our Trading Taxes hub and our blog for related analyses. Read on for context-specific guidance.
Quarterly estimated tax requirements
This section covers quarterly estimated tax requirements. For the practical framework, see our Trading Taxes hub and our blog for related analyses. Read on for context-specific guidance.
Common tax filing mistakes
This section covers common tax filing mistakes. For the practical framework, see our Trading Taxes hub and our blog for related analyses. Read on for context-specific guidance.