When you sell an investment at a profit, the IRS taxes that gain—at preferential long-term rates if you held it more than one year, or at your ordinary income tax rate if you held it less. Our calculator determines your exact capital gains tax based on your filing status, income, holding period, and applicable state taxes.
Long-term capital gains rates (for assets held more than 1 year) are 0%, 15%, or 20% depending on taxable income. Single filers pay 0% up to $47,025; 15% from $47,026–$518,900; and 20% above $518,900 (2024). These are significantly lower than ordinary income tax rates.
Short-term capital gains are from assets held 1 year or less and are taxed as ordinary income—up to 37% for top earners. Long-term gains (held more than 1 year) qualify for preferential rates of 0%, 15%, or 20%. Holding investments more than a year can dramatically reduce taxes.
Tax-loss harvesting sells investments at a loss to offset capital gains from other sales, reducing your tax bill. Losses first offset gains of the same type (long-term vs long-term), then the other type. Up to $3,000 in net capital losses can offset ordinary income annually; excess carries forward.
Single homeowners can exclude up to $250,000 of home sale profit; married filing jointly can exclude up to $500,000. You must have owned and lived in the home as your primary residence for at least 2 of the last 5 years. Gains above the exclusion are taxable at long-term capital gains rates.
Assets inherited at death receive a stepped-up cost basis equal to the fair market value at the date of death. This eliminates capital gains tax on all appreciation during the decedent's lifetime. Heirs only owe tax on gains occurring after they inherit.
The wash-sale rule disallows a loss deduction if you buy substantially identical securities within 30 days before or after the sale at a loss. To harvest a tax loss while maintaining market exposure, buy a similar but not identical fund—e.g., replace an S&P 500 fund with a total market fund.