Most Americans are taxed on the income they earn through work. Those taxes are based on how much someone earns, with higher tax rates charged to higher amounts of income.
But taxes on investments aren’t handled the same way. The money someone makes from selling a house, a stock, or some other investment is called a capital gain. The tax rates for capital gains are different depending on how long the investment was owned, the amount of investment income received, and how much the taxpayer makes in annual income.
