Paychecks & taxes
Capital Gains Tax Calculator
Built and maintained by Chandranshu Kumar · Figures from the IRS, SSA, BLS and Freddie Mac
A year can halve the tax
The single biggest thing you control on investment tax is how long you hold. Under a year, the profit is short-term and taxed at your ordinary income rate, the same as your paycheck. Cross the one-year mark and it becomes long-term, taxed at 0%, 15% or 20% depending on your income. For a lot of people that is the difference between paying 22% or 24% and paying 15%. It is why "just hold it a little longer" is sometimes real tax advice, though never a reason to hang onto an investment you would otherwise sell.
Long-term uses the 0/15/20% brackets, simplified. This does not include the net investment income tax or state tax. Not tax advice.
How the capital gains tax is worked out
A long-term gain is taxed at one of three rates, 0%, 15% or 20%, chosen by your total income and filing status. On a $20,000 gain stacked on $80,000 of income for a single filer, the rate lands at 15.0%, so the tax is $3,000 and you keep $17,000.
A short-term gain, from an investment held a year or less, is taxed as ordinary income instead, at the same brackets as your paycheck. For many middle incomes that means a rate above the 15% long-term figure, which is why the one-year holding line matters so much.
This estimate covers the federal capital gains rate only. It leaves out the net investment income tax that can apply at higher incomes and any state tax on gains. The income tax tool shows the ordinary brackets a short-term gain would use, and the methodology lists the rates.
Common questions
Short-term vs long-term gains?
Held a year or less, the profit is short-term and taxed like ordinary income. Held longer, it is long-term and taxed at the lower 0%, 15% or 20% rates.
How do I qualify for the lower long-term rate?
Hold the investment more than a year before selling. Cross that line and the profit is taxed at the long-term rates of 0%, 15% or 20% rather than your ordinary income rate. Here that puts the rate at 15.0%.
Does this include state tax or the net investment income tax?
No. It shows the federal long-term rate on its own. Some states tax gains as regular income, and an extra 3.8% net investment income tax can apply at higher incomes, both of which would raise the total above the $3,000 shown here.