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 Ohio, as in other states, capital gains tax applies to the profit made from selling an asset such as real estate, stocks, or personal property. The tax rate on capital gains can be lower than the regular income tax rate. Capital gains are classified by the IRS 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 at ordinary income tax rates. Long-term capital gains, for assets held for more than one year, are taxed at reduced rates, which can vary depending on the taxpayer's income level. Ohio does not have a separate state capital gains tax; instead, capital gains are taxed as regular income on the state income tax return at the state's income tax rates. It's important to consult with an attorney or tax advisor to understand the specific tax implications for any capital gains transactions.