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 Georgia, as in the rest of the United States, capital gains tax applies to the profit made from the sale of various assets such as real estate, stocks, and personal property. The tax rate for capital gains can be lower than the regular income tax rate, depending on the duration the asset was held. Short-term capital gains, for assets held for one year or less, are taxed at the same rate as ordinary income. Long-term capital gains, on assets held for more than one year, are taxed at reduced rates, which can vary based on the taxpayer's income level. These rates are set by federal law, as the Internal Revenue Service (IRS) governs capital gains taxation. Georgia does not have a separate capital gains tax rate; instead, capital gains are taxed as regular income on the state income tax return. Therefore, the tax rate for capital gains in Georgia will be the same as the individual's state income tax rate, in addition to any federal capital gains taxes owed.