What is the capital gains rate?

The capital gains rate refers specifically to the tax rate applied to profits that are realized from the sale of assets or investments, such as stocks, bonds, real estate, or other capital assets. When an individual sells an asset for more than its purchase price, the profit made is referred to as a capital gain. This gain is then subject to taxation, which is what defines the capital gains rate.

In contrast, the other options describe different types of income or tax situations. The tax rate on dividends pertains to income derived from shares of stock, while the standard tax rate applied to income involves wages and salaries. The tax rate on interest income applies specifically to earnings from savings accounts or bonds. Understanding the distinct nature of capital gains is essential for effective portfolio management since it impacts investment decisions, tax planning, and overall financial strategy.