Short-term vs. long-term capital gains
When you sell an investment for more than you paid, the profit is a capital gain. How it's taxed depends on how long you held the asset:
- Short-term (one year or less): taxed as ordinary income at your regular federal rate, from 10% to 37%.
- Long-term (more than one year): taxed at preferential rates of 0%, 15% or 20%, depending on your total taxable income.
Holding an investment just one day past the one-year mark can cut the tax substantially, especially for people in the 22% bracket or higher.
2026 long-term capital gains brackets
| Rate | Single | Married filing jointly | Head of household |
|---|---|---|---|
| 0% | Up to $49,450 | Up to $98,900 | Up to $66,200 |
| 15% | Up to $545,500 | Up to $613,700 | Up to $579,600 |
| 20% | Above $545,500 | Above $613,700 | Above $579,600 |
These thresholds apply to total taxable income including the gain. Your gain is "stacked" on top of your other income, so part of a gain can fall in the 0% bracket and the rest in the 15% bracket — the calculator handles this automatically.
The 3.8% net investment income tax
Higher earners may owe an additional 3.8% net investment income tax (NIIT) on the lesser of their investment income or the amount by which their modified AGI exceeds $200,000 (single or head of household), $250,000 (married filing jointly) or $125,000 (married filing separately). These thresholds are set by law and are not adjusted for inflation.
Ways to reduce capital gains tax
- Hold for more than a year to qualify for long-term rates.
- Harvest losses: capital losses offset gains, and up to $3,000 of excess losses a year can offset ordinary income, with the rest carried forward.
- Use tax-advantaged accounts: gains inside a 401(k), traditional IRA or Roth IRA aren't taxed when you sell.
- Home sale exclusion: if you owned and lived in your main home for at least two of the last five years, up to $250,000 of gain ($500,000 for married couples) is excluded.
Most states also tax capital gains, usually as ordinary income, and a few (such as Washington) have a separate capital gains tax. This calculator shows federal tax only.
Worked example
A single filer with $70,000 of other taxable income sells shares bought for $20,000 for $45,000 after holding them for three years. The $25,000 long-term gain stacks on top of the $70,000, putting total taxable income at $95,000. Because the 0% bracket for single filers ends at $49,450 and their ordinary income already exceeds it, the whole gain falls in the 15% bracket, for a federal tax of $3,750. Had they sold after only eleven months, the whole gain would be taxed as ordinary income in the 22% bracket — $5,500, or $1,750 more.
Frequently asked questions
What is the capital gains tax rate for 2026?
How much can I make and pay 0% capital gains tax?
Is crypto taxed as capital gains?
Do I pay capital gains tax when I sell my house?
Sources & methodology
This calculator was last reviewed on November 2, 2026. Figures are based on the following official and primary sources:
- IRS – Topic no. 409, Capital gains and losses
- IRS – Topic no. 559, Net investment income tax
- IRS Revenue Procedure 2025-32 (2026 inflation adjustments)
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