3 Tax Filing Watch-Outs If You Sold Any Investments in 2025
Written by
Karen Doyle
Edited by
Rebekah Evans
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At tax filing time, you don’t want to be surprised with a big bill because you sold investments during the year.
But you will be taxed on the capital gain of any investment you sell — that means the difference between the price you paid for the asset and the price you sold it for. Understanding how investment gains are taxed will help you pay the right amount of tax.
Here are three things to watch out for if you sold any investments in 2025.
How Long Did You Hold the Asset?
The IRS classifies capital gains based on the length of time you held the asset. Any asset you bought and sold within a year will generate a short-term capital gain. If you held the asset for more than a year before you sold it, you will be taxed on a long-term capital gain. The tax rate for each type of gain is different.
If you have short-term capital gains, they will be taxed at your regular income tax rate. If you have long-term capital gains, you can subtract any short-term capital losses to arrive at your net capital gain. Your tax rate on net capital gain depends on your income.
If your income is $48,350 or less and you are single, or $96,700 and you are married filing jointly, your net capital gain is not taxed. If your income is between $48,351 and $533,400, and you are single, your net capital gain is taxed at 15%. If your income is between $96,701 and $600,050 and you are married filing jointly, your net capital gain is taxed at 15%. If your income is above these thresholds, your net capital gain is taxed at 20%.
Was the Investment You Sold a Mutual Fund?
Capital gains in mutual funds can be a little tricky. Because a mutual fund is a basket of securities that are bought and sold regularly by the fund manager, mutual funds can generate capital gains even if you don’t sell your shares of the fund. Capital gains in mutual funds are taxed as long-term capital gains.
Do You Have Any Losses From Prior Years?
If you sold investments at a loss, that loss can offset the capital gain on other investments in the same year. If you have more losses than gains, you can carry forward the net loss to subsequent years, up to $3,000. In other words, you can deduct up to $3,000 from your net capital gains if you have at least that much in losses from a prior year.
Having taxable capital gains means that your investments are making money, and that’s a good thing. But understanding what to look out for will keep you from paying more than you have to at tax time.
Editor’s note: This article is for informational purposes only and does not constitute financial advice. Investing involves risk, including the possible loss of principal. Always consider your individual circumstances and consult with a qualified financial advisor before making investment decisions.
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