Capital Gains Tax Calculator
Calculate your capital gains tax on stock, real estate, or other investments. Compare short-term and long-term tax rates.
How Capital Gains Tax Works
When you sell an asset for more than you paid, the profit is a capital gain and is subject to tax. The tax rate depends on two key factors: how long you held the asset and your overall income level. Understanding these rules can save you thousands of dollars through smart timing of asset sales.
Short-Term vs Long-Term Rates
Short-term capital gains (assets held one year or less) are taxed as ordinary income, meaning they're added to your salary and wages and taxed at your marginal rate — potentially as high as 37%. Long-term gains (held over one year) receive preferential rates of 0%, 15%, or 20%. This rate difference is one of the biggest tax incentives for patient, long-term investing.
Tax-Smart Investment Strategies
Consider holding investments for at least one year and one day to qualify for long-term rates. Use tax-loss harvesting to offset gains with losses from underperforming investments. If you're near a tax bracket threshold, you might spread asset sales across two calendar years to keep your rate lower. Holding appreciated assets in tax-advantaged accounts like IRAs or 401(k)s eliminates capital gains tax entirely within the account.
Cost Basis Methods
Your cost basis is typically what you paid for the asset plus any fees or commissions. For stocks purchased at different times, you can use specific identification, FIFO (first in, first out), or average cost methods. Choosing the right method can significantly affect your tax bill. Inherited assets receive a "stepped-up" basis to their value at the date of death, potentially eliminating decades of unrealized gains.
Frequently Asked Questions
What is the difference between short-term and long-term capital gains?
Short-term capital gains apply to assets held for one year or less and are taxed at your ordinary income tax rate (10-37%). Long-term capital gains apply to assets held for more than one year and are taxed at preferential rates of 0%, 15%, or 20% depending on your income level. This makes holding investments longer a significant tax advantage.
How are long-term capital gains tax rates determined?
For 2024, single filers pay 0% on long-term gains if taxable income is under $47,025, 15% between $47,025-$518,900, and 20% above $518,900. Married filing jointly thresholds are $94,050 and $583,750 respectively. An additional 3.8% Net Investment Income Tax (NIIT) may apply for high earners.
Can I offset capital gains with capital losses?
Yes. Capital losses offset capital gains dollar-for-dollar. If your losses exceed your gains, you can deduct up to $3,000 of net losses against ordinary income per year. Remaining losses carry forward to future tax years indefinitely. This is called tax-loss harvesting and is a common strategy.
Do I pay capital gains tax on my home sale?
You can exclude up to $250,000 in gains ($500,000 for married couples) from the sale of your primary residence if you've lived in it for at least 2 of the last 5 years. Any gain above the exclusion amount is taxed as a capital gain. Investment properties do not qualify for this exclusion.