Capital gains tax is a tax on income received from the sale of an asset—such as a business, real estate, your home, stocks, bonds, coin collections, and jewelry. Capital gains tax is paid on the financial gain between the amount you paid for (or invested to build) the asset, and the amount for which it is sold.
The rate (percentage) paid as capital gains tax has traditionally been lower than the rate (percentage) paid on income tax. And the Internal Revenue Service (IRS) has traditionally taxed long term gains differently than short term gains—with the distinction based on how long the taxpayer owned or held the asset.
In Texas, as in all states, capital gains tax is governed by federal law, as there is no state-level capital gains tax. The Internal Revenue Service (IRS) is responsible for regulating and collecting capital gains taxes on the sale of assets such as businesses, real estate, stocks, and other valuable items. The tax rate applied to capital gains depends on whether the gain is long-term or short-term. Long-term capital gains, from assets held for more than one year, are taxed at a lower rate than short-term gains, which are from assets held for less than a year. These rates are typically lower than the rates for ordinary income tax. It's important for individuals and businesses to consult with an attorney or tax specialist to understand the specific tax implications of any asset sale and to ensure compliance with all IRS regulations and requirements.
