Profit (or loss) from the sale of a capital asset, such as stock received at a distribution from a nonqualified deferred compensation plan or from restricted stock units with deferral of share delivery.

Capital gain may be short-term (held 12 months or less) or long-term (held more than 12 months).

Short-term capital gain is taxed at your rate of ordinary income tax.

Your rate of tax on long-term capital gain depends on your yearly taxable income. In 2025, the income thresholds for the tax rates on capital gains are the following:

0%
Single: Up to $48,350
Joint: Up to $96,700

15%
Single: $48,351 to $533,400
Joint: $96,701 to $600,050

20%
Single: Over $533,400
Joint: Over $600,050

You must file IRS Form 8949 and Schedule D with your federal IRS Form 1040 tax return for any tax year in which you sold stock, regardless of whether or not you have a capital gain. Capital losses can be used to offset capital gains to establish a net position for tax purposes. Only $3,000 of net capital losses can be deducted in any one year, with the remaining balance carried over to future years indefinitely.