A tax levied on the profits from the sale of assets. The tax is based on the difference in value between when the investment was purchased and when it was sold. It applies to mutual funds, stocks, bonds, real estate and other things. In the United States, different tax rates apply to short- and long-term capital gains. Gains also can be offset by capital losses. Short-term gains, those held for less than a year, are taxed at ordinary income rates according to tax bracket — 10%, 15%, 25%, 28%, 33% or 35%. For 2012, long-term gains, on assets held for more than 12 months, are taxed at either 0% if you’re in the lowest two brackets or 15% if you’re in the higher brackets. Those rates have been in effect since 2008; in 2007, long-term gains were taxed at either 5% or 15%. The rates are scheduled to increase to 10% or 20% in 2013, unless Congress acts to extend them. When the tax code was overhauled in 1986, Congress equalized the tax rates — capital gains were taxed the same as ordinary income. Previously, they were taxed at lower rates.