What is Capital Gains Tax?

Capital gains tax is a tax imposed on the profit also known as capital gains. These can be earned from the sale of certain assets, such as stocks, real estate, or investments, that have increased in value over time. When an individual or entity sells an asset for more than its original purchase price, the difference between the sale price and the purchase price is considered a capital gain. Capital gains can be categorized into short-term or long-term. Short-term capital gains are when assets are held for less than a year. Long-term capital gains are assets held for more than a year between the purchase and sale. 

Realized vs. Unrealized Capital Gains 


A realized capital gain is a profit that has been earned from the sale of an asset, such as stocks, real estate, or investments when the sale price is more than the original purchase price. It’s called “realized” because the gain has been actualized or realized through the sale transaction. In other words, you have made money on the investment, and this profit has been locked in by completing the sale. Realized capital gains are considered taxable.


Unrealized capital gains, also known as paper gains, refer to the increase in the value of an asset, such as stocks, real estate, or investments, that you currently own but have not yet sold. These gains are considered “unrealized” because they exist on paper but have not been actualized through a sale transaction. In other words, you have not yet converted the increased value of the asset into cash. Unrealized capital gains occur while you continue to hold the asset, and they represent the potential profit you could make if you were to sell the asset at its current market value.

What is the Idaho Capital Gains Tax?

When it comes to capital gains tax in Idaho, short-term and long-term capital gains are taxed the same and treated as ordinary income. So when it comes to capital gains, it is safe to use the same brackets and rates that are used in the state of Idaho for income tax. Whether you are a single filer or a married jointly filer will make a difference in the tax rate you will pay. 

  • Single- $0 to $12,950         Married- $0 to $25,900          Tax Rate- 0%
  • Single-$12,950 to $14,612 Married- $25,900 to $29,224 Tax Rate- 1%
  • Single-$14,612 to $17,937 Married- $29,224 to $35,874 Tax Rate- 3%
  • Single-$17,937 to $21,261 Married- $35,874 to $42,522 Tax Rate- 4.5%
  • Single-$21,261 or more      Married- $42,522 or more      Tax Rate- 6%

Taxes in general can be confusing and overwhelming. This is especially true for taxes involving things that we dont work with often such as capital gains tax. Specifics are always changing and it’s always a good idea to have a professional on your side to guide you through different financial transitions. Give us a call at Cooper Norman if you have any questions and we would love to help you and make the most of your money!