Tax & Regulation
What is Short-Term Capital Gains Tax - US?
In the US, Short-Term Capital Gains (STCG) tax applies to profits from selling investments held for one year or less, taxed at your ordinary income tax rate, which can be as high as 37% federal plus state taxes.
Formula
STCG Tax = (Sale Price - Cost Basis) × Your Marginal Ordinary Income Tax Rate
How to Interpret
STCG is taxed exactly like wages, a significant penalty for active trading. The gap between STCG (up to 37% + 3.8% NIIT + state) and LTCG (max 20% + NIIT) is one of the biggest reasons US investors hold positions past the 12-month mark.
Typical Ranges
2025 ordinary brackets (single filer) range from 10% to 37%. High earners in CA/NY can pay an effective combined STCG rate above 50%.