Capital Gains Tax
Capital gains tax is what you owe on the profit when you sell an investment for more than you paid. Assets held over a year get preferential long-term rates (0%, 15%, or 20% depending on income); assets held a year or less are taxed as ordinary income, which is usually higher.
The one-year line is worth real money. On a $50,000 gain, the long-term rate of 15% costs $7,500, while the same gain sold a day early is ordinary income — $12,000 in the 24% bracket, a $4,500 difference for a matter of timing. Long-term rates are 0%, 15% or 20% depending on income, and the 0% band is genuinely useful in a low-income year. Two things people miss: the gain is only realised when you sell, so an investment that has risen owes nothing until then, and inside a 401(k) or IRA nothing is taxed as you go, which is a large part of why those accounts compound faster than a taxable brokerage.