Capital Gains Tax Calculator

Understanding Capital Gains Tax

Capital gains tax is a federal tax on the profit you make when selling an investment or asset for more than you paid. The tax rate depends on how long you held the asset (holding period) and your total taxable income.

Short-Term vs Long-Term Capital Gains

The IRS classifies capital gains into two categories based on how long you owned the asset before selling:

• Short-Term Capital Gains — Assets held for one year or less are taxed at your ordinary income tax rate, which ranges from 10% to 37% depending on your tax bracket.
• Long-Term Capital Gains — Assets held for more than one year qualify for preferential tax rates of 0%, 15%, or 20%, based on your taxable income and filing status.

2024 Long-Term Capital Gains Tax Rates

Net Investment Income Tax (NIIT)

High-income taxpayers may also owe an additional 3.8% Net Investment Income Tax (NIIT) on the lesser of their net investment income or the amount by which their modified adjusted gross income (MAGI) exceeds the threshold:

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

What Counts as Cost Basis?

Cost basis is the original purchase price of your investment plus certain additional costs:

• Purchase price paid for the asset
• Broker commissions and transaction fees
• Capital improvements (for real estate)
• Closing costs when buying property
• Transfer taxes and recording fees

A higher cost basis reduces your capital gain and lowers your tax liability.

Capital Loss Rules

If you sell an asset for less than your cost basis, you have a capital loss. Capital losses can:

• Offset capital gains dollar-for-dollar
• Deduct up to $3,000 per year against ordinary income ($1,500 if married filing separately)
• Carry forward unused losses to future tax years indefinitely

Tax-Saving Strategies

• Hold assets for over one year to qualify for the lower long-term capital gains rates.
• Tax-loss harvesting — Sell losing investments to offset gains from winners.
• Use tax-advantaged accounts — Invest through 401(k)s, IRAs, or Roth IRAs where gains grow tax-free or tax-deferred.
• Qualified Opportunity Zones — Reinvest large gains into QOZ funds to defer and potentially reduce taxes.
• Charitable giving — Donate appreciated assets to avoid capital gains tax and receive a deduction.

Frequently Asked Questions