Investment Details
Tax Results
How Capital Gains Tax Works in the US
Capital gains tax applies to profit from selling assets like stocks, bonds, mutual funds, and real estate. The rate depends heavily on how long you held the asset. Holding just one day beyond the one-year mark can cut your federal tax rate from 37% down to 20% or less.
Short-Term vs Long-Term Rates
Short-term gains (held ≤1 year) are taxed as ordinary income — the same rates as your salary (10%–37%). Long-term gains (held >1 year) qualify for preferential rates of 0%, 15%, or 20%.
2026 Long-Term Capital Gains Rates
- 0%: Single income up to $49,450 | Married up to $98,900 | Head of Household up to $66,200
- 15%: Single up to $545,500 | Married up to $613,700 | Head of Household up to $579,600
- 20%: Above those thresholds
- +3.8% NIIT: Additional surtax if income exceeds $200,000 (single) / $250,000 (married)
You bought stock for $10,000 and sold for $25,000 after 14 months (long-term). Your total income is $80,000 (single). Your long-term rate is 15%, so federal tax = $2,250. Add 5% state tax = $750. Total tax = $3,000. Net profit after tax = $12,000 on a $15,000 gain. If you had sold after just 10 months (short-term) and are in the 22% bracket, federal tax alone would be $3,300 — $1,050 more.
Strategies to Reduce Capital Gains Tax
- Hold over 1 year to qualify for long-term rates — the single most impactful move
- Tax-loss harvesting: sell losing positions to offset gains dollar-for-dollar
- Use tax-advantaged accounts: gains inside IRAs and 401(k)s are not taxed annually
- Home sale exclusion: exclude up to $250,000 ($500,000 married) of gain on a primary residence
- Donate appreciated assets: to charity instead of selling — you avoid capital gains and get a deduction
- Time sales in low-income years: if your income drops, you may qualify for the 0% long-term rate