How are short term and long term capital gains taxed differently in the cryptocurrency industry?

1 answers

• May 06, 2022 · 3 years ago
  Short term and long term capital gains in the cryptocurrency industry are taxed differently to encourage long term investment. Short term capital gains, which are gains from assets held for one year or less, are taxed at the individual's ordinary income tax rate. This means that the rate can be as high as 37%. On the other hand, long term capital gains, which are gains from assets held for more than one year, are taxed at a lower rate. For individuals in the highest tax bracket, the long term capital gains tax rate is 20%. However, individuals in lower tax brackets may qualify for a lower long term capital gains tax rate, such as 0% or 15%. The lower tax rate for long term capital gains incentivizes investors to hold onto their cryptocurrency investments for a longer period of time.
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