Which of the following statements is true regarding capital gains tax?

The statement regarding capital gains tax that is true is that capital gains from the sale of a primary residence can be excluded up to certain limits. Under the Internal Revenue Code Section 121, taxpayers are allowed to exclude up to $250,000 of capital gains on the sale of their primary residence if they meet specific ownership and use requirements. For married couples filing jointly, the exclusion limit is $500,000. This benefit is designed to encourage homeownership and provides substantial tax savings for individuals selling their homes after having lived in them for at least two years out of the previous five years.

Other statements contain inaccuracies: not all capital gains are taxed at the same rate, as they can differ between long-term and short-term rates. Only long-term capital gains, which apply to assets held longer than a year, benefit from preferential rates. Short-term capital gains are actually taxed at ordinary income tax rates, which can be higher, not lower.