What is one of the primary advantages of long-term capital gains over short-term gains?

The primary advantage of long-term capital gains over short-term gains is that they benefit from lower tax rates. Long-term capital gains arise from the sale of assets held for more than a year and are typically taxed at preferential rates compared to short-term gains, which are taxed as ordinary income at higher rates. This tax treatment incentivizes taxpayers to hold investments for longer periods, promoting stability in the financial markets.

The other options do not accurately reflect the treatment of long-term capital gains. For instance, while there are certain exemptions for specific types of income, long-term capital gains are not entirely exempt from taxation. Additionally, they do not qualify for immediate refunds in the way suggested; refunds typically pertain to overpayments of tax rather than the nature of capital gains. Finally, while deductions are a part of tax calculations, long-term capital gains do not inherently allow for larger deductions compared to short-term gains. Thus, the preferential tax rates on long-term capital gains represent a significant benefit for investors.