Question

If you hold an investment for more than one year, how does this affect the tax rate on your profit?

(1 point)
Responses

It often lowers the tax rate paid.
It often lowers the tax rate paid.

It delays the time you must pay tax.
It delays the time you must pay tax.

It removes the need to pay any tax.
It removes the need to pay any tax.

It often increases the tax rate paid.
It often increases the tax rate paid.

Answer 1

It often lowers the tax rate paid. Long-term capital gains (held >1 year) are typically taxed at lower rates than short-term gains.