capital gains tax

An income tax assessed on investments or assets that are held for at least 12 months. The U.S. capital gains tax rate was lowered in 2003 to 15 percent by 20 percent, which is lower than the rate for ordinary income, which can be as much as 35 percent. For individuals in the 10-percent or 15-percent income tax bracket, the capital gains tax rate is 5 percent, down from 10 percent. Unless Congress takes further action, the pre-2003 capital-gains rates will reappear after 2008.