Ask a Fool: Can I Avoid Capital Gains Tax When I Sell a Stock?
The capital gains tax you'll owe generally depends on two main factors: your total income (adjusted gross income) and how long you owned the stock. Profits earned on stocks that you held for a year or less are considered to be short-term capital gains, and are taxed at your marginal tax rate, or tax bracket. On the other hand, if you held the stock for at least a year and a day, the profit qualifies as a long-term capital gain, and is taxed at more favorable rates.
Having said that, there are three main reasons investors may not have to pay capital gains tax.
First, if you've owned the stock for over a year and you fall into the 10% or 15% tax bracket, your long-term capital gains tax rate is 0%.
Source: Fool.com
