Long-term vs short-term gains
If you hold an asset more than a year before selling, the profit is a long-term capital gain, taxed at preferential federal rates of 0%, 15% or 20% depending on your income.
Sell within a year and it is a short-term gain, taxed as ordinary income at your regular bracket — often a much higher rate.
This single distinction is one of the biggest levers in investment tax planning.
How the 0/15/20% rates work
The long-term rate depends on your total taxable income. The gain stacks on top of your other income to decide which dollars fall in the 0%, 15% or 20% band.
For 2025, single filers pay 0% on long-term gains while taxable income stays under about $48,350, then 15%, and 20% only at very high incomes.
Reducing capital gains tax
Holding for over a year, harvesting losses to offset gains, and using tax-advantaged accounts all cut the bill. High earners may also owe the 3.8% net investment income tax, which this calculator does not include.
This is a federal estimate using 2025 tax-year figures and the inputs you provide. It does not include state tax, credits, or every deduction. Confirm with the IRS or a tax professional before filing.
Frequently asked questions
How much is capital gains tax?
Long-term gains are taxed federally at 0%, 15% or 20% based on income. Short-term gains are taxed as ordinary income at your regular bracket, up to 37%.
What counts as long-term?
An asset held for more than one year before sale. A year or less is short-term and taxed at higher ordinary rates.
Do capital gains push me into a higher bracket?
Long-term gains have their own rate schedule, but they stack on your income to set the rate. Short-term gains are added directly to ordinary income.
Does this include state tax?
No — this is federal only. Most states also tax capital gains; use the state capital gains calculators for that portion.