Capital gains are profits you make from selling an asset and they are generally taxed at different rates depending on how long you have held the asset.
If you hold your assets for longer than a year, you can often benefit from a reduced tax rate on your profits. Those in the lower tax bracket could pay nothing for their capital gains rate, while high-income taxpayers could save as much as 17% off the ordinary income rate, according to the IRS. For taxable years beginning in 2023, the tax rate on most net capital gain is no higher than 15% for most individuals. However, a capital gains rate of 20% applies to the extent that your taxable income exceeds the thresholds set for the 15% capital gain rate.
So for most individuals, the long term capital gain rate are more favorable than the income tax rate(based on the tax brackets) on their W2 or interest income.
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