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 Oregon, capital gains tax is applied to income from the sale of assets such as businesses, real estate, personal homes, stocks, bonds, and collectibles. Capital gains are the profits realized from the sale of these assets, calculated as the difference between the sale price and the original purchase price or cost basis. The tax rate for capital gains can be lower than the regular income tax rate. The federal Internal Revenue Service (IRS) distinguishes between long-term and short-term capital gains for tax purposes, with long-term gains typically resulting from assets held for more than one year and taxed at a lower rate compared to short-term gains from assets held for less than a year. Oregon follows the federal tax treatment for capital gains, but it also taxes these gains as part of the state income tax. Therefore, residents must report capital gains on their state tax returns, and these gains are subject to Oregon's state income tax rates.