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 New Hampshire, there is no state-level capital gains tax. Residents are subject to federal capital gains tax regulations, which tax the profit from the sale of assets such as real estate, stocks, bonds, and personal property. The federal tax rate on capital gains depends on the taxpayer's income level and the duration for which the asset was held. Long-term capital gains, from assets held for more than one year, are taxed at lower rates than short-term gains, which are from assets held for one year or less. These rates can vary from 0% to 20% for long-term gains, with higher-income individuals potentially subject to an additional 3.8% net investment income tax. Short-term gains are taxed as ordinary income, according to the taxpayer's income tax bracket. It's important for individuals to consult with an attorney or tax advisor to understand the specific implications for their personal tax situation.