US Capital Gains Tax Guide

Long-Term vs Short-Term Rates

Long-term capital gains (held more than 1 year): 0%, 15%, or 20% based on income. 2025 brackets: 0% rate applies up to $48,350 single / $96,700 MFJ. 15% rate from there to $533,400 single / $600,050 MFJ. 20% rate above. Short-term gains (held ≤ 1 year): taxed as ordinary income — same brackets as W-2 wages (10-37%). Holding period: from day after purchase to day of sale. Selling on day 365 = short-term; day 366 = long-term. This single day can mean tens of thousands in tax difference.

Net Investment Income Tax (NIIT)

An additional 3.8% tax on net investment income for high earners. Thresholds: $200,000 single / $250,000 MFJ / $125,000 MFS modified AGI. Applies to: capital gains, dividends, interest, rental income, passive business income. Does NOT apply to: wages, self-employment income, active business income, retirement distributions. A $50,000 long-term gain for a single filer with $250,000 AGI: $7,500 federal (15%) + $1,900 NIIT (3.8%) = $9,400 federal total. NIIT cannot be reduced by retirement contribu

Primary Residence Exclusion

Section 121: exclude up to $250,000 single / $500,000 MFJ of gain on primary home sale. Requirements: owned AND used as primary residence for at least 2 of past 5 years; cannot have used exclusion in past 2 years. A married couple buying for $300,000, living 10 years, selling for $850,000: $550,000 gain - $500,000 exclusion = $50,000 taxable gain (at long-term rates). Without this exclusion, full $550,000 would be taxable. Special rules: divorce, death of spouse, deployment, work relocation can

Tax-Loss Harvesting

Capital losses offset capital gains dollar-for-dollar. Excess losses can offset up to $3,000 of ordinary income per year. Remaining losses carry forward indefinitely. Strategy: sell losing positions in December to offset gains realized earlier in the year. Watch the wash sale rule: cannot buy back the same security within 30 days (before or after) without disallowing the loss. Workaround: buy a similar-but-not-identical security (S&P 500 fund swap for total market fund). Don't apply wash sale ru

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US Capital Gains Tax Calculator (Long-Term & Short-Term)

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