Capital Gains Tax Calculator

Capital Gains Tax Calculator

When you sell a stock, piece of real estate, or other investment for more than you paid, the profit is a capital gain -- and the IRS taxes it. This calculator estimates your federal capital gains tax by taking your purchase price (cost basis), sale price, holding period, and taxable income. It shows your gain, applicable tax rate, estimated tax owed, and net proceeds after federal tax. Capital gains treatment varies dramatically based on how long you held the asset, so knowing the rate before you sell can change your timing decision.

How Capital Gains Tax Is Calculated

The starting point is always the same: Capital Gain = Sale Price - Cost Basis. What happens next depends on your holding period:

• Short-term gain (held 1 year or less): taxed as ordinary income at your marginal rate (10%, 12%, 22%, 24%, 32%, 35%, or 37%)
• Long-term gain (held more than 1 year): taxed at preferential rates of 0%, 15%, or 20% based on taxable income
• Net Investment Income Tax (NIIT): an additional 3.8% applies to investment income when modified AGI exceeds $200,000 single / $250,000 married filing jointly
• Depreciation recapture: for rental or business property, depreciation previously deducted is recaptured at a 25% rate, separate from the long-term gain rate

For 2026, the long-term capital gains brackets for single filers are approximately: 0% on income up to $48,350; 15% on income up to $533,400; 20% above that.

Worked Examples

Scenario 1 -- Stock held less than a year: An investor bought 100 shares of a tech stock at $85/share ($8,500 total) and sold them 8 months later at $130/share ($13,000 total). Gain = $4,500. Short-term gain taxed at the investor's 22% ordinary income rate. Federal tax = $990. Net proceeds after federal tax = $12,010. If they had waited four more months past the one-year mark, the same $4,500 gain at a 15% long-term rate would cost only $675 -- saving $315.

Scenario 2 -- Primary home sale: A couple bought a home for $310,000 in 2019 and sold it for $550,000 in 2026. Gross gain = $240,000. The married filing jointly exclusion is $500,000 under Section 121. Since they lived there as their primary residence for more than 2 of the last 5 years, the full $240,000 gain is excluded. Federal tax = $0.

Scenario 3 -- Rental property sale: An investor bought a rental property for $200,000 in 2015, claimed $40,000 in depreciation over 10 years, and sold it for $380,000 in 2026. Adjusted cost basis = $200,000 - $40,000 = $160,000. Total gain = $220,000. Depreciation recapture on $40,000 at 25% = $10,000. Remaining long-term gain of $180,000 at 15% = $27,000. NIIT of 3.8% on $220,000 = $8,360. Total federal tax = $45,360.

Reference Table

When to Use

• Before selling a stock or investment property, to compare the tax cost of selling now versus waiting past the one-year mark for long-term treatment
• Planning a year-end tax-loss harvest -- quantify how much gain you need to offset before selling losing positions
• Evaluating whether to use the primary residence exclusion on a home you have lived in, or whether it makes sense to delay a sale to qualify
• Estimating net proceeds from an investment sale so you know exactly how much you will have left after the IRS takes its share
• Deciding between FIFO, specific identification, or average cost basis methods for stock sales to minimize the gain recognized

Common Mistakes

1. Forgetting the holding period down to the exact day. Long-term treatment requires holding more than 365 days -- not "about a year." Selling at 364 days means paying ordinary income rates. For large gains, double-check the exact purchase date before scheduling a sale.
2. Using the original purchase price as cost basis for inherited assets. Inherited assets typically receive a "stepped-up" basis equal to the fair market value on the date of death. Using the decedent's original purchase price instead massively overstates your taxable gain.
3. Ignoring state capital gains tax. This calculator covers federal tax only. California taxes capital gains as ordinary income at up to 13.3%. New York adds up to 10.9% state plus city tax. Your actual after-tax proceeds can be 10-15 percentage points lower than the federal calculation alone.
4. Overlooking depreciation recapture on rental property. Many landlords are surprised to learn that depreciation they deducted over the years is recaptured at 25% when the property is sold -- separate from the standard long-term capital gains rate on the remaining appreciation. Always calculate these two components separately.

Current Context for 2026

Long-term capital gains rates are unchanged from prior years. The 0% bracket threshold has increased modestly with inflation adjustments -- single filers with taxable income below approximately $48,350 owe zero federal tax on long-term gains, making this bracket worth targeting for lower-income years. The primary residence exclusion ($250,000 single / $500,000 married) has not been adjusted for inflation since it was set in 1997, meaning it covers a smaller share of appreciation in high-cost markets like San Francisco, New York, and Boston where prices have risen sharply. Cryptocurrency is treated as property by the IRS -- each sale or swap is a taxable event, and short-term crypto gains are taxed as ordinary income, which catches many investors off guard. Estate tax exemption is $13.99 million per person in 2026, meaning stepped-up basis on inherited assets remains widely available.

Tips

1. Hold investments for at least one year and one day from the purchase date -- at a 22% income bracket, shifting a $20,000 gain from short-term to long-term saves $1,400 in federal tax
2. In years when your income is unusually low (career break, major deductions, retirement transition), review your long-term gain exposure against the 0% bracket ceiling and consider realizing gains that year
3. Use tax-loss harvesting to offset gains dollar-for-dollar, but observe the 30-day wash-sale rule -- repurchasing a substantially identical security within 30 days before or after the sale disallows the loss
4. For donated appreciated assets held more than one year, you avoid capital gains entirely and deduct the full fair market value, making donation often more tax-efficient than selling and donating cash
5. On rental property sales, get a depreciation schedule from your accountant before listing -- knowing the recapture amount upfront prevents surprises in net proceeds
6. For stocks with lots purchased at different prices, use the specific identification method to sell the highest-cost shares first, minimizing the taxable gain recognized in the current year

Related Calculations

• Tax Calculator -- estimate your full federal income tax including how capital gains stack on top of ordinary income
• Self-Employment Tax Calculator -- if you also have business or freelance income, see how SE tax interacts with investment gains
• Profit Margin Calculator -- for business asset sales, understand the margin on the original investment relative to the tax cost of exiting