Capital Gains Tax Calculator

How Capital Gains Tax Works

When you sell a capital asset (stocks, bonds, real estate, or other investments) for more than you paid, the profit is called a capital gain. The federal government taxes that profit, and the rate depends on two things: how long you held the asset and your total taxable income.

Your cost basis is typically the original purchase price plus any improvements or acquisition costs, like broker commissions. The gain is the sale price minus the cost basis. If you sell for less than you paid, you have a capital loss, and no tax is owed on the loss.

Short-term vs. long-term gains

The holding period is what determines your rate. Assets held for one year or less produce short-term capital gains, which are taxed at your ordinary income rate (10% to 37%). Hold for more than one year, and the gain qualifies for long-term rates: 0%, 15%, or 20%.

That rate gap can be as large as 17 percentage points, so waiting just one extra day past the one-year mark is one of the easiest ways to cut your tax bill.

How bracket stacking works

Capital gains are "stacked" on top of your ordinary income. Your wages, salary, and other income fill the lower tax brackets first. Then your gain is taxed starting wherever your ordinary income left off. In practice, this means a gain can span two brackets: part taxed at one rate, part at a higher rate.

2026 Capital Gains Tax Rates and Brackets

Long-Term Capital Gains Brackets

2026 ordinary income tax brackets (short-term gains)

Short-term gains are added to your ordinary income and taxed at these rates:

Source: IRS Rev. Proc. 2025-32 (IR-2025-103), OBBB Sec. 70101 (P.L. 119-21).

The 3.8% Net Investment Income Tax (NIIT)

On top of the capital gains rate, high earners may owe an extra 3.8% surtax on investment income. Created by the Affordable Care Act (IRC Sec. 1411), the NIIT kicks in when your modified adjusted gross income (MAGI) exceeds these thresholds, which are not adjusted for inflation:

• Single: $200,000
• Married Filing Jointly: $250,000
• Married Filing Separately: $125,000
• Head of Household: $200,000

The tax applies to the lesser of your net investment income (here, the capital gain) or the amount your MAGI exceeds the threshold. So a high-income taxpayer with a long-term gain could face a combined top rate of 23.8% (20% + 3.8%).

Strategies to Reduce Capital Gains Tax

1. Hold for more than one year to qualify for the lower long-term rates (0%, 15%, or 20%) instead of ordinary income rates (up to 37%).
2. Tax-loss harvesting: Sell losing investments to offset gains dollar for dollar. Net losses above your gains can offset up to $3,000 of ordinary income per year.
3. Primary residence exclusion: Under IRC Sec. 121, you can exclude up to $250,000 of gain ($500,000 for married filing jointly) on the sale of your primary home if you lived in it for at least 2 of the last 5 years.
4. Tax-advantaged accounts: Hold investments in 401(k), IRA, or Roth IRA accounts where gains grow tax-deferred or tax-free.
5. Donate appreciated stock: Donating appreciated securities to charity avoids the capital gain entirely and may give you a fair-market-value deduction.
6. Time your sales: Realize gains in low-income years (like early retirement) to stay in the 0% long-term bracket.
7. Qualified Opportunity Zones: Reinvest gains into QOZ funds for tax deferral and potential exclusion (made permanent under OBBB Sec. 70418).
8. Step-up in basis at death: Under IRC Sec. 1014, inherited assets get a stepped-up basis, which wipes out unrealized gains for heirs.

This calculator covers standard capital gains on stocks, bonds, and real estate. Collectibles are taxed at a 28% max rate, and unrecaptured Section 1250 depreciation recapture tops out at 25%. For a full federal and state estimate, download Tax Calculator US.