Capital Gains Tax Calculator
Estimate the capital gains tax on the disposition of a capital asset — including federal rates (short-term and long-term), state taxes for all 50 US states and DC, and the 3.8% Net Investment Income Tax surtax.
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How Capital Gains Tax Works in the United States
A capital gain arises when a capital asset — such as shares of stock, mutual funds, ETFs, real estate, or other investment property — is disposed of for more than its adjusted cost basis (the original purchase price plus qualifying adjustments). The gain is the difference between the proceeds and the cost basis. Capital gains are recognized in the tax year the transaction occurs and must be reported to the IRS.
The Internal Revenue Code divides capital gains into two categories based on the holding period — the length of time the asset was owned before disposition.
Short-Term Capital Gains
Assets held for one year or less (365 days or fewer). Short-term gains are taxed as ordinary income at your marginal federal income tax rate — the same rate applied to wages, salaries, and other ordinary income. Federal rates range from 10% to 37% depending on taxable income and filing status.
Long-Term Capital Gains
Assets held for more than one year (366 days or more). Long-term gains qualify for preferential federal rates of 0%, 15%, or 20% depending on taxable income and filing status — significantly lower than ordinary income rates for most taxpayers. The holding period begins the day after acquisition and ends on the day of disposition.
Beyond the federal tax, most states also tax capital gains as part of their income tax systems. Additionally, higher-income taxpayers may owe the 3.8% Net Investment Income Tax (NIIT) on top of both federal and state taxes. The combined burden can be substantial in high-tax states — for example, a California resident with income above the NIIT threshold could face a combined marginal rate exceeding 37% on short-term capital gains from the sale of securities.
Federal Capital Gains Tax Rates (2025 Tax Year)
The tables below show the federal long-term capital gains tax rates by filing status for tax year 2025. These thresholds are indexed to inflation and adjusted periodically. Short-term gains are taxed at ordinary income rates (10%–37%); consult IRS Publication 505 for full ordinary income bracket details.
| Filing Status | 0% Rate | 15% Rate | 20% Rate |
|---|---|---|---|
| Single | Up to $48,350 | $48,351 – $533,400 | Above $533,400 |
| Married Filing Jointly | Up to $96,700 | $96,701 – $600,050 | Above $600,050 |
| Married Filing Separately | Up to $48,350 | $48,351 – $300,025 | Above $300,025 |
| Head of Household | Up to $64,750 | $64,751 – $566,700 | Above $566,700 |
Source: IRS Rev. Proc. 2024-40 (2025 inflation adjustments). Thresholds apply to taxable income including the capital gain. These figures are approximate and may differ from final published IRS guidance.
State Capital Gains Taxes
Unlike the federal government, most US states do not provide a preferential rate for long-term capital gains — they simply tax investment gains as ordinary income at the state's top marginal rate. A handful of states have no broad-based income tax at all, meaning capital gains from the disposal of capital assets are not subject to state-level taxation.
States with no income tax (capital gains effectively untaxed at state level): Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Note that Washington State enacted a 7% excise tax on long-term capital gains above $250,000 starting in 2023 — this calculator uses a 0% rate for Washington as the excise tax is a separate mechanism not yet universally enforced; verify current Washington rules with a tax professional.
Notable high-tax states for capital gains: California imposes the highest effective capital gains rate of any US state at 13.3% (for income above $1 million), with no preference for long-term gains. New York charges up to 10.9%; New Jersey up to 10.75%; Oregon up to 9.9%; Minnesota up to 9.85%; and Hawaii up to 11%.
Some states offer limited exemptions or reduced rates for specific types of capital assets (e.g., small business stock, farm property). These nuances are beyond the scope of this educational calculator. The rates shown represent approximate top marginal rates and may not reflect local add-on taxes, surtaxes, or county/city income taxes.
Net Investment Income Tax (NIIT)
The Net Investment Income Tax — sometimes called the Medicare surtax — is a 3.8% federal surtax imposed under IRC Section 1411 on the net investment income of individuals, estates, and trusts whose modified adjusted gross income (MAGI) exceeds certain thresholds. It was enacted as part of the Affordable Care Act (ACA) to help fund Medicare. Unlike regular income tax, the NIIT is not reduced by the long-term capital gains preference — it applies to both short-term and long-term capital gains equally.
| Filing Status | MAGI Threshold |
|---|---|
| Single / Head of Household | $200,000 |
| Married Filing Jointly | $250,000 |
| Married Filing Separately | $125,000 |
The NIIT applies to the lesser of (a) net investment income or (b) the amount by which MAGI exceeds the applicable threshold. Net investment income includes interest, dividends, capital gains, rental income, royalties, and passive business income, but generally excludes wages, self-employment income, Social Security, and distributions from qualified retirement plans. The NIIT is reported on IRS Form 8960 and is in addition to regular income tax. Importantly, the thresholds are not indexed for inflation, so more taxpayers become subject to it over time.
Tax-Loss Harvesting
Tax-loss harvesting is a portfolio management technique in which an investor realizes capital losses from positions that have declined in value in order to offset capital gains realized elsewhere in the portfolio. When losses exceed gains, up to $3,000 of net capital loss may be applied against ordinary income per year, with unused losses carried forward indefinitely.
For example, if an investor has realized a $10,000 long-term capital gain from the disposition of one position and a $6,000 unrealized loss in another position, realizing that loss would reduce the net taxable gain to $4,000 — potentially saving thousands of dollars in tax depending on the applicable rates.
The Wash Sale Ruleis a critical constraint on tax-loss harvesting. Under IRC Section 1091, if a taxpayer disposes of a security at a loss and purchases a "substantially identical" security within 30 days before or after the disposition date, the loss is disallowed for tax purposes. The disallowed loss is added to the cost basis of the replacement shares, deferring (not permanently eliminating) the tax benefit. The wash sale rule applies across all accounts — including IRAs — that the taxpayer controls.
What constitutes "substantially identical" is a facts-and-circumstances determination. Generally, shares of the same stock are substantially identical. ETFs tracking different indexes but covering similar market segments may or may not be substantially identical — the IRS has not issued definitive guidance on all scenarios. Investors who engage in tax-loss harvesting should consult a qualified tax professional to navigate these rules and ensure compliance.
Frequently Asked Questions
How long do I need to wait for long-term capital gains rates?
You must hold an asset for more than one year (more than 365 days) before the long-term capital gains tax rates apply. Assets held one year or less are subject to short-term rates, which are taxed as ordinary income — significantly higher for most taxpayers. The holding period starts the day after you acquire the asset and includes the day of disposition.
Do I pay capital gains tax in my 401(k) or IRA?
No. Transactions inside tax-advantaged accounts like traditional 401(k)s, traditional IRAs, Roth IRAs, and Roth 401(k)s are not subject to capital gains tax. In traditional accounts, you pay ordinary income tax only when you take distributions. In Roth accounts, qualified distributions are entirely tax-free. Capital gains tax applies only to assets held in taxable brokerage accounts.
What is the wash sale rule?
The wash sale rule (IRS Code Section 1091) disallows a tax loss deduction if you purchase a substantially identical security within 30 days before or after the date of the loss transaction. If a wash sale occurs, the disallowed loss is added to the cost basis of the replacement shares. This rule exists to prevent taxpayers from artificially generating tax losses while maintaining continuous market exposure.
How do I report capital gains on my tax return?
Capital gains and losses from the sale of securities are reported on IRS Schedule D (Capital Gains and Losses) and Form 8949 (Sales and Other Dispositions of Capital Assets). Your broker will send a Form 1099-B each year summarizing proceeds, cost basis, and holding period for taxable transactions. Short-term gains flow to Schedule D Part I; long-term gains flow to Part II. Net Investment Income Tax (if applicable) is reported on Form 8960.
Can I offset capital gains with capital losses?
Yes. Capital losses from the disposition of capital assets can offset capital gains. Long-term losses are first applied against long-term gains; short-term losses against short-term gains. If losses exceed gains, up to $3,000 of net capital loss may be deducted against ordinary income per year. Unused losses carry forward indefinitely to future tax years.