Capital Gains Tax Calculator — Short vs. Long Term (2026 Brackets)

How Capital Gains Tax Works

Gain = Proceeds − Cost Basis | LTCG Rate = 0%/15%/20% based on income | NIIT = 3.8% on investment income above threshold

Capital gains tax is calculated based on the holding period (short-term vs. long-term), your total taxable income, and filing status. Short-term gains are taxed at ordinary income rates, while long-term gains benefit from preferential rates of 0%, 15%, or 20%. An additional 3.8% Net Investment Income Tax (NIIT) may apply for high-income taxpayers.

Holding Period

Holding Period — The number of days between purchase and sale. Assets held 365 days or less are short-term; assets held longer than 365 days are long-term and qualify for lower tax rates.

Cost Basis

Cost Basis — The original purchase price of the asset, including commissions, fees, and improvements (for real estate). A higher cost basis reduces your taxable gain.

LTCG Rate

Long-Term Capital Gains Rate — Preferential tax rates of 0%, 15%, or 20% for assets held more than one year. The rate depends on your total taxable income and filing status. In 2026, 0% rate applies up to $47,025 for single filers.

NIIT

Net Investment Income Tax — An additional 3.8% tax on the lesser of net investment income or the excess of modified adjusted gross income over threshold amounts ($200,000 single, $250,000 married filing jointly).

Effective Rate

Effective Tax Rate — The total tax paid (federal + NIIT + state) divided by the total capital gain. This represents your true blended tax rate on the investment gain.

How to Use

1. Select the asset type (stocks, bonds, crypto, real estate, or collectibles).
2. Enter the purchase and sale dates to calculate the holding period.
3. Enter your cost basis (what you paid) and sale proceeds.
4. Provide your annual ordinary income and filing status to determine the correct tax bracket.
5. Optionally enter your state capital gains tax rate for a complete picture of your tax liability.

Quick Reference

Common Uses

• •Estimate your federal and state capital gains tax liability before selling stocks, real estate, or other appreciated investments.
• •Compare the tax impact of short-term versus long-term holding periods to decide the optimal time to sell an asset.
• •Plan tax-loss harvesting strategies by modeling how realized gains and losses offset each other in a given tax year.
• •Evaluate the after-tax return of an investment sale to make informed decisions about portfolio rebalancing.

Understanding the Result

Capital gains tax is one of the most important considerations for investors when selling assets. The tax treatment depends primarily on how long you held the asset before selling. Short-term capital gains (assets held for 365 days or less) are taxed as ordinary income at your marginal tax rate, which can be as high as 37%. This is a significant tax disadvantage compared to long-term gains, which benefit from preferential rates of 0%, 15%, or 20% depending on your income level. The difference is substantial: a high-income earner in the 37% bracket pays nearly twice the tax on short-term gains compared to long-term gains. This tax preference is a key reason why financial advisors recommend a "buy and hold" investment strategy. For 2026, the 0% long-term capital gains rate applies to single filers with total taxable income up to $47,025, married filing jointly up to $94,050, and heads of household up to $63,000. The 15% rate applies to most middle-income taxpayers, and the 20% rate applies to high-income earners. The Net Investment Income Tax (NIIT) adds an additional 3.8% for single filers with modified AGI exceeding $200,000 ($250,000 for married filing jointly). This surtax was introduced as part of the Affordable Care Act to help fund Medicare and applies to the lesser of your net investment income or the excess over the threshold. State taxes vary widely — some states like Texas, Florida, and Nevada have no state income tax, while others like California (up to 13.3%) and New York (up to 10.9%) can significantly increase the total tax burden on capital gains. Understanding these rules allows investors to make tax-aware decisions about when to sell assets and how to structure their investment portfolio.

Worked Examples

Frequently Asked Questions

What is the difference between short-term and long-term capital gains?

Short-term capital gains are profits from assets held for 365 days or less and are taxed at your ordinary income tax rate (up to 37%). Long-term capital gains are from assets held more than 365 days and are taxed at preferential rates of 0%, 15%, or 20%. This difference can result in paying nearly half the tax on long-term gains compared to short-term gains for high-income earners.

What is the Net Investment Income Tax (NIIT) and who pays it?

The NIIT is an additional 3.8% surtax on net investment income that applies to individuals with modified adjusted gross income exceeding $200,000 ($250,000 for married filing jointly). It was introduced by the Affordable Care Act and applies to interest, dividends, capital gains, rental income, and other passive investment income. The tax is 3.8% of the lesser of your net investment income or the excess over the threshold.

Can I offset capital gains with capital losses?

Yes, capital losses can offset capital gains dollar-for-dollar. If your losses exceed your gains, you can deduct up to $3,000 ($1,500 if married filing separately) of net capital losses against ordinary income each year. Remaining losses carry forward to future tax years indefinitely. This strategy, known as tax-loss harvesting, is commonly used to reduce taxable gains.

How do state taxes affect my capital gains tax bill?

State capital gains tax rates vary widely. Some states (Texas, Florida, Nevada, South Dakota, Tennessee, Wyoming, Alaska, New Hampshire) have no state income tax. Others tax capital gains as ordinary income, with top rates from about 4% to 13.3%. A few states have special rates for capital gains. Enter your state's rate to see the combined federal-state tax impact.

How accurate is this calculator for real-world use?

This calculator uses standard mathematical formulas and provides estimates based on the inputs you enter. For financial decisions, always verify results with a qualified professional and check against official statements or lender-provided figures which may include additional factors not modeled here.

Pro Tips

• →The holding period clock starts the day AFTER purchase. If you bought on January 15, the one-year mark is January 16 of the following year — sell on January 15 and you have held for exactly 365 days (short-term). Wait one more day for long-term treatment.
• →Tax-loss harvesting: sell losing positions before year-end to offset gains. Up to $3,000 of net losses can offset ordinary income, with the remainder carried forward indefinitely. This is one of the few free lunches in tax planning.
• →If you are in the 0% LTCG bracket (single filers with total income under $47,025 in 2025), consider realizing gains up to the top of the 0% bracket each year — it is essentially a tax-free step-up in cost basis that reduces future tax liability.
• →The 3.8% Net Investment Income Tax applies to single filers above $200,000 and married couples above $250,000. If you are near the threshold, timing income across tax years — or maximizing pre-tax retirement contributions to reduce MAGI — can avoid the surtax on capital gains.

Limitations to Know

• •The holding period calculation counts calendar days and starts the day after purchase. The calculator treats 365 days as short-term per IRS rules (must exceed 365 days for long-term). However, weekends, holidays, and market closures are not considered — the actual trade settlement date may differ from your entered dates.
• •The short-term tax rate uses a simplified marginal bracket lookup based on annual ordinary income alone. Real tax calculations consider deductions, credits, phase-outs, and the stacking of capital gains on top of ordinary income. The actual marginal rate may differ by one bracket.
• •State tax treatment is simplified to a flat rate. Many states have graduated brackets, special capital gains exclusions (like the home sale exclusion), or exemption thresholds. Consult your state's tax authority for precise rates.
• •This calculator does not handle wash sales (selling and repurchasing the same security within 30 days), which disallow loss deductions under IRS rules. It also does not model the qualified small business stock exclusion (Section 1202) or opportunity zone deferrals.

Sources

• Capital Gains Tax
• Capital Gains and Losses