Short-term vs long-term capital gains
The rule: hold an investment more than one year and the profit is taxed at long-term rates. Sell at a year or less and it is taxed as ordinary income — the same as your salary.
Why this is the single most valuable tax fact for investors: the difference is often 10–20 percentage points on the same profit, for the same trade, decided by the calendar alone.
Mechanics:
• The clock starts the day AFTER purchase
• 'More than one year' means 366 days, not 365
• Long-term rates have their own brackets, and the lowest can be 0%
• Losses offset gains; excess losses offset ordinary income up to a yearly cap, and the rest carries forward
Chart (illustrative): $10,000 of profit, two days apart.