US Capital Gains Tax Calculator

US Capital Gains Tax Guide

What's the difference between Long-Term and 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.

What's the key thing to understand about 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 contributions or most other typical deductions, making it a genuinely additional cost layered on top of standard capital gains tax for higher earners.

What's the key thing to understand about 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 a spouse, military deployment, or work relocation can all allow a reduced exclusion even if the standard 2-out-of-5-years ownership test isn't fully met.

What's the key thing to understand about 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 the wash sale rule to cryptocurrency under current law, which is a notable loophole compared to stocks, though this is an area regulators have signalled interest in closing.

Short-Term vs. Long-Term: Why Holding Period Changes Everything

The US tax code treats gains on assets held one year or less (short-term) very differently from assets held more than one year (long-term). Short-term gains are taxed as ordinary income, stacked on top of your wages and other income at your regular marginal tax brackets, which can mean a substantially higher rate than long-term treatment. Long-term capital gains instead get their own, generally lower, set of preferential tax rates based on your taxable income. This difference is large enough that many investors deliberately wait until an asset crosses the one-year holding mark before selling, when a sale isn't urgent, purely to shift the gain from ordinary rates into the more favorable long-term brackets.

Using Tax-Loss Harvesting to Offset Gains

If you've realized gains elsewhere in your portfolio, selling a different investment that's currently at a loss lets you offset that gain, reducing or eliminating the tax owed on it — a strategy known as tax-loss harvesting. Losses first offset gains of the same type (short-term losses against short-term gains, long-term against long-term) before any excess can offset the other type, and any losses beyond that can offset a limited amount of ordinary income each year, with the remainder carried forward to future tax years indefinitely. One rule to watch: the wash-sale rule disallows the loss if you buy the same or a "substantially identical" security within 30 days before or after the sale, so harvesting a loss and immediately rebuying the identical position doesn't work — investors typically wait out the window or buy a similar, non-identical replacement in the meantime.

State Capital Gains Tax: How It Stacks on Top of Federal Tax

Federal long-term and short-term capital gains rates are only part of the picture for most sellers, because most US states also tax capital gains, typically as ordinary income at the state's regular income tax rates rather than offering the preferential long-term rate the federal system provides. A handful of states have no state income tax at all, meaning no additional state-level capital gains tax applies there, while others tax capital gains at rates that can meaningfully add to the federal bill, particularly in higher-tax states where combined federal and state rates on a large long-term gain can end up substantially higher than the federal rate alone suggests. Some states offer their own partial exclusions or different treatment for specific asset types, such as primary residence sales or certain small-business stock, separate from the federal exclusions. Because state tax residency at the time a gain is realized generally determines which state's rules apply, timing a sale around a planned move between states, where legally and genuinely a change of residency rather than a contrived one, can materially change the total tax bill on a large gain, which is one reason state tax residency rules get particular scrutiny around major asset sales.

2025 Long-Term Capital Gains Tax Brackets (Reference)

Long-term capital gains (on assets held more than one year) are taxed at 0%, 15%, or 20% federally, and which rate applies depends on your total taxable income — ordinary income plus the gain — not just the gain itself. These thresholds are adjusted for inflation each year, so treat the figures below as approximate for the current tax year and always confirm against the latest IRS tables.

Capital gains are "stacked" on top of your ordinary income when determining which bracket they fall into, so even if your salary alone would put you in the 15% capital gains bracket, a large enough gain can push the top slice of it into the 20% bracket. Worked Example: Selling Stock With a $40,000 Long-Term Gain A single filer with $95,000 of ordinary taxable income sells shares held for three years, realizing a $40,000 long-term gain. Stacking the gain on top of ordinary income gives a combined total of $135,000. Since the entire $40,000 falls between roughly $48,350 and $533,400, it is taxed at 15%, producing federal capital gains tax of 40,000 x 15% = $6,000. If this filer's modified adjusted gross income exceeds $200,000 (single), the 3.8% Net Investment Income Tax would also apply to some or all of the gain — but at $135,000 total income here, NIIT does not apply. State tax, if the filer lives in a state that taxes capital gains as ordinary income (most states do), would be calculated separately on top of this federal figure.

Qualified Dividends vs. Capital Gains: Why the Distinction Matters

Qualified dividends are taxed at the same preferential rates as long-term capital gains (0%, 15%, or 20% depending on income), which is why investment income statements often group them together — but they are not the same thing as a capital gain, and the rules for qualifying differ. A dividend only qualifies for the lower rate if the underlying stock was held for a minimum holding period (generally more than 60 days within a 121-day window around the ex-dividend date) and is paid by a US corporation or a qualifying foreign company; dividends that don't meet this test are "ordinary" and taxed at your regular income tax rate, which can be more than double the qualified rate for a high earner. Capital gains, by contrast, depend entirely on your own holding period for the asset itself — more than one year for long-term treatment, one year or less for short-term (taxed as ordinary income). A portfolio that generates mostly ordinary (non-qualified) dividends and short-term gains can face a materially higher effective tax rate than one weighted toward long-term holdings and qualified dividend payers, even with identical total investment returns — which is one reason tax-aware investors pay attention to turnover and dividend quality, not just total return.