Market downturns, like the one we’re currently experiencing this year, could be a good time to adjust your investment portfolio to minimize the tax bite. Here’s how it works.

Investments in taxable accounts held longer than one year are taxed as a long-term capital gain. The rates are either 0%, 15% or 20%, depending on your income.

If held less than a year, then the sale is a considered a short-term capital gain and taxed as ordinary income based on your marginal tax bracket.

When calculating net capital gains taxes, you should first evaluate all short-term and long-term transactions separately: