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capital gains tax

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 South Dakota, as in all states, capital gains tax is primarily governed by federal law, not state law. Capital gains are the profits from the sale of an asset and are subject to taxation by the Internal Revenue Service (IRS). The tax rate on capital gains depends on whether the gain is long-term or short-term. Long-term capital gains, from assets held for more than one year, are taxed at a lower rate than short-term gains, which are from assets held for one year or less. These rates are generally lower than the ordinary income tax rates. South Dakota does not have a state income tax, so there are no additional state-level capital gains taxes imposed on residents. This means that individuals in South Dakota only need to consider federal capital gains tax rules when selling assets.

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Taxes

capital gains tax

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Taxes

capital gains tax

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