Capital gains tax is a tax on income received from the sale of an asset—such as a business, real estate, your home, stocks, bonds, coin collections, and jewelry. Capital gains tax is paid on the financial gain between the amount you paid for (or invested to build) the asset, and the amount for which it is sold.

The rate (percentage) paid as capital gains tax has traditionally been lower than the rate (percentage) paid on income tax. And the Internal Revenue Service (IRS) has traditionally taxed long term gains differently than short term gains—with the distinction based on how long the taxpayer owned or held the asset.

In Connecticut (CT), capital gains tax is levied on the profit realized from the sale of non-inventory assets when the sale price exceeds the purchase price. This includes gains from the sale of investments like stocks, bonds, real estate, and personal items such as coin collections and jewelry. Capital gains are classified as either short-term or long-term based on the holding period of the asset. Short-term capital gains, for assets held for one year or less, are taxed as ordinary income at the taxpayer's normal tax rate. Long-term capital gains, for assets held for more than one year, are taxed at reduced rates, which are typically lower than the rates for ordinary income. The federal tax rates for long-term capital gains vary depending on the taxpayer's income bracket, and these rates are subject to change with tax law revisions. Connecticut also taxes capital gains as part of the state income tax, and the gains are taxed at the same rate as ordinary income. It's important to consult with an attorney or tax specialist to understand the current tax rates and regulations, as well as any available exemptions or deductions, such as the exclusion for the sale of a primary residence under certain conditions.