Capital Gains Tax Calculator

When you sell a stock, mutual fund, ETF, real estate, or other capital asset at a profit, you owe capital gains tax on the difference between your sale price and your cost basis (generally the original purchase price plus any transaction fees). The tax rate depends primarily on how long you held the asset before selling.

Short-Term vs. Long-Term Capital Gains

The IRS distinguishes between short-term and long-term capital gains based on your holding period. Assets held for one year or less before selling generate short-term capital gains, which are taxed at your ordinary income tax rate. Assets held for more than one year qualify for long-term capital gains treatment, which carries significantly lower tax rates of 0%, 15%, or 20% depending on your taxable income and filing status.

This distinction creates a meaningful tax incentive to hold investments for at least one year before selling. For example, a taxpayer in the 24% ordinary income bracket who sells a stock at a $10,000 profit would owe $2,400 in tax on a short-term gain but only $1,500 on a long-term gain taxed at 15%. That single decision to hold slightly longer saves $900 in taxes on the same profit.

Net Investment Income Tax (NIIT)

High-income taxpayers may also owe the Net Investment Income Tax, an additional 3.8% surtax on investment income. This applies when your modified adjusted gross income exceeds $200,000 for single filers or $250,000 for married couples filing jointly. The NIIT applies to the lesser of your net investment income or the amount by which your MAGI exceeds the threshold, and it is assessed on top of the regular capital gains rate.

Capital Losses and Netting

If you sell investments at a loss, those capital losses can offset your capital gains dollar for dollar. Short-term losses first offset short-term gains, and long-term losses first offset long-term gains, with any remaining losses applied to the other category. If your total losses exceed your total gains, you can deduct up to $3,000 of net capital losses against ordinary income per year, with any excess carried forward to future tax years indefinitely.

Long-Term Capital Gains Rates by Filing Status

Rate	Single	Married Filing Jointly	Head of Household
0%	Up to $48,350	Up to $96,700	Up to $64,750
15%	$48,351 – $533,400	$96,701 – $600,050	$64,751 – $566,700
20%	Over $533,400	Over $600,050	Over $566,700

Thresholds shown are approximate for the 2026 tax year. Short-term gains are taxed at ordinary income rates ranging from 10% to 37%.

Short-Term Capital Gains (Ordinary Income Rates)

Short-term capital gains do not receive any preferential tax treatment. They are added to your other taxable income and taxed at your marginal ordinary income tax rate. The 2026 federal income tax brackets range from 10% on the first portion of income up to 37% on income exceeding $609,350 for single filers or $731,200 for married couples filing jointly.

The gap between short-term and long-term rates can be substantial. A single filer earning $200,000 who realizes a $50,000 short-term gain would pay a 32% marginal rate ($16,000 in tax), while the same gain classified as long-term would be taxed at 15% ($7,500). Understanding these rate differences is essential for tax-efficient investment planning.

Hold Investments for Over One Year

The simplest and most effective strategy is to hold investments for at least one year and one day before selling. This qualifies your gains for the lower long-term capital gains rates. If you are considering selling a profitable position that you have held for 10 or 11 months, it may be worth waiting until the one-year mark to reduce your tax liability significantly.

Tax-Loss Harvesting

Tax-loss harvesting involves selling investments that have declined in value to generate capital losses that offset your capital gains. For example, if you realize $20,000 in gains from selling one stock, you could sell another stock at a $15,000 loss to reduce your taxable gain to $5,000. Be aware of the wash-sale rule, which disallows the loss deduction if you repurchase the same or a substantially identical security within 30 days before or after the sale.

Use Tax-Advantaged Accounts

Investments held in tax-advantaged accounts such as 401(k)s, IRAs, and Roth IRAs are not subject to capital gains tax when you buy and sell within the account. Roth accounts offer the additional benefit that qualified withdrawals in retirement are completely tax-free. Holding your most actively traded or highest-growth investments in these accounts can shield significant gains from taxation.

Consider Specific Lot Identification

When you own multiple lots of the same investment purchased at different prices and times, you can choose which specific shares to sell. By selecting shares with the highest cost basis, you minimize the taxable gain on the sale. This requires notifying your broker to use specific identification rather than the default first-in, first-out method. This strategy works best when you have accumulated shares at varying prices over time.

Gift Appreciated Assets

Donating appreciated securities directly to a qualified charity allows you to avoid paying capital gains tax on the appreciation while also claiming a charitable deduction for the full market value. This can be significantly more tax-efficient than selling the investment, paying the capital gains tax, and donating the cash proceeds.