Capital Gains Tax Calculator

Short-Term vs. Long-Term Capital Gains

How long you hold an asset before selling determines your tax rate. Short-term capital gains apply to assets held less than one year and are taxed at your ordinary income tax rate, which can be as high as 37%. Long-term capital gains apply to assets held one year or longer and benefit from preferential rates of 0%, 15%, or 20% depending on your total taxable income and filing status.

Net Investment Income Tax (NIIT)

High earners may owe an additional 3.8% Net Investment Income Tax on top of regular capital gains taxes. The NIIT applies if your modified adjusted gross income exceeds $200,000 for single filers or $250,000 for married couples filing jointly. The surtax is calculated on the lesser of your net investment income or the amount by which your MAGI exceeds the threshold.

The Wash Sale Rule

If you sell a security at a loss and repurchase the same or a "substantially identical" security within 30 days before or after the sale, the IRS disallows the loss deduction under the wash sale rule. The disallowed loss is added to the cost basis of the replacement shares. This rule applies to stocks, bonds, mutual funds, ETFs, and options, but does not currently apply to cryptocurrency under IRS guidance.

Strategies to Reduce Capital Gains Tax

Tax-loss harvesting lets you offset gains by selling losing investments to reduce your net taxable gain. Holding assets for at least one year qualifies you for the lower long-term rates. Contributing to tax-advantaged accounts like IRAs and 401(k)s shelters investment growth from annual taxation. Charitable donations of appreciated stock let you avoid capital gains entirely while taking a deduction for the full market value.