3 Unusual Capital Gains Rules to Watch Out For

The U.S. uses a progressive tax system, meaning that the more money you make, the more you'll owe in taxes. However, all income isn't created equal, and the type of gains you receive will determine how it's taxed.

Image source: Getty Images.

As a way to encourage people to invest, long-term capital gains -- the profit earned from selling an asset you've held longer than one year -- are taxed more favorably than your regular income. With income taxes, you fall into one of seven brackets: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. On the other hand, capital gains have a simpler structure, with the following percentages based on your income level:

Source Fool.com