What is the maximum tax rate for long-term capital gains?

The maximum tax rate for long-term capital gains is indeed 20%. This rate applies to assets held for more than one year before being sold. Long-term capital gains benefit from this lower tax rate as an encouragement for long-term investment, in contrast to short-term capital gains, which are taxed at ordinary income rates.

The 20% rate applies to higher-income taxpayers; those in lower tax brackets may qualify for even lower rates, such as 0% or 15%. Understanding how these rates function is critical for professionals in real estate, as many transactions involve long-term holdings that can significantly impact tax liabilities upon sale.