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 Louisiana (LA), as in all states, capital gains tax is primarily governed by federal law. Capital gains are the profits from the sale of an asset and are subject to taxation when the asset is sold for more than the purchase price. The Internal Revenue Service (IRS) differentiates between short-term capital gains, which are taxed as ordinary income, and long-term capital gains, which are taxed at a reduced rate. Short-term capital gains apply to assets held for one year or less, while long-term capital gains apply to assets held for more than one year. The specific tax rates can vary depending on the taxpayer's income bracket and the type of asset sold. Louisiana does not have a separate state capital gains tax; instead, capital gains are included as part of the state income tax. Therefore, residents must report capital gains on their state income tax returns, and these gains are taxed at the state's regular income tax rates.