The Ultimate Capital Gains Tax Guide for 2024


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What Is Capital Gains Tax?

Capital gains taxes are the taxes you pay on any profits you make from selling investments, like stocks, bonds, properties, cars, or businesses. The tax isn’t applied for owning these assets — it only hits when you profit from selling them.

It’s important for beginner investors to understand that a number of factors can affect their capital gains tax rate: how long they hold onto an investment, which asset they’re selling, the amount of their annual income, as well as their marital status.

Read on to learn how capital gains work, the capital gains tax rates, and tips for lowering capital gains taxes.

Capital Gains Tax Rates Today

Whether you hold onto an investment for at least a year can make a big difference in how much you pay in taxes.

When you profit from an asset after owning it for a year or less, it’s considered a short-term capital gain. If you profit from it after owning it for at least a year, it’s a long-term capital gain.

Short-Term Capital Gains Tax Rates (for Tax Year 2023)

The short-term capital gains tax is taxed as regular income or at the “marginal rate,” so the rates are based on what tax bracket you’re in.

The Internal Revenue Service (IRS) changes these numbers every year to adjust for inflation. You may learn your tax bracket by going to the IRS website, or asking your accountant.

Here’s a table that breaks down the short-term capital gains tax rates for the 2023 tax year, or for tax returns that are filed in 2024.


Long-Term Capital Gains Tax Rate By Income for Tax Year 2023 (or Tax Season 2024)

Long-term capital gains taxes for an individual are simpler and lower than for married couples. These rates fall into three brackets: 0%, 15%, and 20%.

The following table breaks down the long-term capital-gains tax rates for the 2023 tax year by income and status.


A higher 28% is applied to long-term capital gains from transactions involving art, antiques, stamps, wine, and precious metals.

Additionally, individuals with modified adjusted gross incomes (MAGIs) over $200,000 and couples filing jointly with MAGIs over $250,000 — who have net investment income, may have to pay the Net Investment Income Tax (NIIT), which is 3.8% on the lesser of the net investment income or the excess over the MAGI limits.

Tips For Lowering Capital Gains Taxes

Hanging onto an investment for more than a year can lower your capital gains taxes significantly.

Capital gains taxes also don’t apply to so-called “tax-advantaged accounts” like 401(k) plans, IRAs, or 529 college savings accounts. So selling investments within these accounts won’t generate capital gains taxes. Instead, traditional 401(k)s and IRAs are taxed when you take distributions, while qualified distributions for Roth IRAs and 529 plans are tax-free.

Single homeowners also get a break on the first $250,000 they make from the sale of their primary residence, which they need to have lived in for at least two of the past five years. The limit is $500,000 for a married couple filing jointly.

For new investors, it might be helpful to know that you may deduct as much as $3,000 in losses from an investment to help offset the amount of taxes on your income.

How US Capital Gains Taxes Compare

Generally, capital gains tax rates affect the wealthiest taxpayers, who typically make a bigger chunk of their income from profitable investments.

Here’s a closer look at how capital gains taxes compare with other taxes, including those in other countries.

Compared to Other Taxes

The maximum long-term capital gains taxes rate of 20% is lower than the highest marginal rate of 37%.

Proponents of the lower long-term capital gains tax rate say the discrepancy exists to encourage investments. It may also prompt investors to sell their profitable investments more frequently, rather than hanging on to them.

Comparison to Capital Gains Taxes In Other Countries

In 2023, the Tax Foundation listed the capital gains taxes of the 27 different European Organization for Economic Cooperation and Development (OECD) countries. The U.S.’ maximum rate of 20% is roughly midway on the spectrum of comparable capital gains taxes.

In comparison, Denmark had the highest top capital gains tax at a rate of 42%. Norway was second-highest at 37.84%. Finland and France were third on the list, both at 34%. In addition, the following European countries all levied higher capital gains taxes than the U.S. (listed in order from highest to lowest): Ireland, the Netherlands, Sweden, Portugal, Austria, Germany, Italy, Spain, and Iceland.

Compared With Historical Capital Gains Tax Rates

Because short-term capital gains tax rates are the same as those for wages and salaries, they adjust when ordinary income tax rates change. For instance, in 2018, tax rates went down because of the Trump Administration’s tax cuts. Therefore, so did short-term capital gains rates.

As for long-term capital gains tax, Americans today are paying rates that are relatively low historically. Today’s maximum long-term capital gains tax rate of 20% started in 2013.

For comparison, the high point for long-term capital gains tax was in the 1970s, when the maximum rate was at 35%.

Going back in time, in the 1920s the maximum rate was around 12%. From the early 1940s to the late 1960s, the rate was around 25%. Maximum rates were also pretty high, at around 28%, in the late 1980s and 1990s. Then, between 2004 and 2012, they dropped to 15%.

Tax Loss Harvesting

Tax loss harvesting is the strategy of selling some investments at a loss to offset the taxable profits from another investment.

Using short-term losses to offset short-term gains is a way to take advantage of tax loss harvesting — because, as discussed above, short-term gains are taxed at higher rates. IRS rules also dictate that short-term or long-term losses must be used to offset gains of the same type, unless the losses exceed the gains from the same type.

Investors can also apply losses from investments of as much as $3,000 to offset income. And because tax losses don’t expire, if only a portion of losses was used to offset income in one year, the investor can “save” those losses to offset taxes in another year.

The Takeaway

Capital gains taxes are the levies you pay from making money on investments. The IRS updates the tax rates every year to adjust for inflation.

It’s important for investors to know that capital gains tax rates can differ significantly based on whether they’ve held an investment for at least a year. An investor’s income level also determines how much they pay in capital gains taxes.

An accountant or financial advisor can suggest ways to lower your capital gains taxes as well as help you set financial goals.

This article originally appeared on and was syndicated by

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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8 smart ways to reinvest your tax refund

8 smart ways to reinvest your tax refund

Imagine if your money could work as tirelessly as you do for your business. That’s the power of your tax refund—it isn’t just a financial breather, it’s a powerful catalyst for growth. The challenge? Figuring out where to direct it.

After successfully filing your small business taxes, there are many smart and practical ways to reinvest your business tax refund. From growing your business without debt to broadening your marketing horizons, here are a few strategies to empower you to make your money work as hard as you do.


During the pandemic, 90% of businesses turned to Canada Emergency Business Account (CEBA) loans for support, but only a small fraction—10% —have managed to fully repay their loan to date. And a whopping 78% haven’t even started chipping away at their payments yet. It’s clear there are still many financial hurdles small businesses are facing.

But don’t lose heart—there’s a silver lining: your tax refund. By using your refund to pay down your business debt, you’re making a strategic leap toward the long-term financial health of your business.

To help you make the most of your business tax refund, here are some debt management strategies to consider:

  • Prioritize high-interest debt. Paying off loans with the highest interest rates first is a smart move that’ll save you money in the long run.
  • Pay more than the minimum. If your refund isn’t enough to wipe out a loan, use it to pay more than the minimum payment if you can—it’ll help you clear the debt faster.
  • Keep a cash buffer. While paying off debt is crucial, keeping enough cash on hand to cover your operating expenses is equally important.


With the Consumer Price Index (CPI) experiencing its steepest climb since 1982, businesses all over Canada are feeling the squeeze. It’s a stark reminder that a financial safety net is as crucial for businesses as it is for individuals.

Your tax refund can be your first thread in weaving that net. Here are some simple strategies to get you on your way:

  • Start with baby steps. It’s better to start small than not start at all—even a modest emergency fund can make a big difference. Aim to squirrel away enough to cover a month of operating expenses, and then steadily build from there.
  • Make it a habit. Establish a plan to feed your emergency fund regularly, not just when a tax refund comes in.
  • Set it and forget it. Want a simple way to ensure your fund grows consistently? Set up automatic transfers from your business bank account to your emergency fund.


In 2021, a staggering 91% of Canadian small and medium-sized businesses jumped on the tech bandwagon, with an average spend of $118,000. And for good reason—tech investments such as Quickbooks can help supercharge business growth and productivity.

Ready to use your business tax refund to invest in the latest tech? Here are some pointers:

  • Identify your tech needs. What areas of your business could use a tech or software boost?
  • Plan your budget. Figure out how much of your tax refund to earmark for tech investments.
  • Do your homework. Dive into different tech solutions to find the one that best matches your needs and budget.


In a digital landscape where 89% of Canadian businesses are making their mark, standing out in the online crowd is more crucial than ever. Your business tax refund could be the golden ticket to boost your online presence and ride this upward wave:

  • Check your digital pulse. Take a good, hard look at your business’s current online footprint, and pinpoint areas that could use a boost.
  • Dive into social media ads. In a hyper-connected world, chances are high that your target market is scrolling through their social media feeds. Ads funded by your refund could be a savvy, cost-effective way to catch their eye.
  • Optimize for mobile. With most Canadians glued to their smartphones, it’s essential to invest funds into a website that is optimized for mobile users.


Finding the perfect fit for your team can be a game-changer, but with 36% of businesses expecting recruitment hurdles, expanding your dream team can be tricky.

This is where your refund can step in. Funnel your refund money towards strategic hiring efforts to onboard talent who are in sync with your goals and growth. Here are some strategies to get you started:

  • Spot your talent gaps. Knowing the skills and expertise your current team is missing will help you zero in on the areas where your hiring efforts are most needed.
  • Kickstart an employee referral program. Your current team can be a goldmine of potential hires. Consider allocating a slice of your refund to fund incentives for a referral program.
  • Invest in employer branding. From fostering a vibrant company culture to maintaining a positive online presence, a strong employer brand makes your business a magnet for high-performing talent.


As a business owner, you’re a master juggler, keeping multiple balls in the air. But your own growth can be the secret sauce to acing your responsibilities. By investing your tax refund in your own training and professional development, you’re not just leveling up your skills—you’re boosting your ability to guide your business to new heights.

Shape your future success with this roadmap:

  • Identify your learning needs. Are there skills or knowledge gaps that could be pivotal to your future success? Pick courses that align with your needs.
  • Think about a mentor. Many business trailblazers climbed to the top with a mentor by their side. A mentor from your industry can give you invaluable guidance based on their own business journey.
  • Join professional or industry associations. These groups can offer resources, training, and networking opportunities.


In a marketplace where consumer tastes are always on the move, your tax refund can be the key to diversifying your product or service lineup to better serve your customers. You’re not just growing your business—you’re creating unique value propositions that make your business stand out from the crowd.

Here are some practical tips for using your tax refund to expand your offerings:

  • Get to know your customers. Invest in surveys or interviews to get a deeper understanding of their needs and preferences. Customer journey mapping is another way to help you get to know your customers better with little to no investment from your tax refund.
  • Scope out the competition. Take a peek at what your competitors are up to. Can you offer something that is similar, but better? Or is there a gap in the market you can fill?
  • Test your ideas. Consider running a small-scale pilot or beta tests to collect feedback and make any necessary tweaks.


When it comes to your business—your voice and your vision are your superpowers. Think about investing your business tax refund in marketing efforts to turn up the volume on this voice and vision. You’re not just promoting your products or services—you are sharing your brand’s unique story and crafting an identity that sticks.

Here are some practical tips for using your tax refund to supercharge your marketing efforts:

  • Dive into market research. Conducting market research is the key to understanding your customers’ needs, preferences, and buying behaviours.
  • Keep an eye on your results. Consider investing your refund in analytics tools to keep tabs on your marketing performance and make data-driven decisions.
  • Bring in a marketing whiz. A marketing pro can help you whip up and manage your content and ads—freeing up more time for you to focus on your business.

And there you have it—your GST/HST refund for business isn’t just a financial breather—it’s a powerful tool. Use these reinvestment ideas to ensure your business tax refund pulls its weight.

This article originally appeared on the Quickbooks Resource Center and was syndicated by



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