Capital Gains Tax Calculator

A capital gain or loss is determined by a two-step calculation:

Gross sale proceeds are the total amount received before subtracting any selling costs. Selling expenses are direct costs of the disposition, such as brokerage commissions and exchange fees, that reduce the amount received. Amount realized is what remains after subtracting selling expenses from gross proceeds. Original cost is the purchase price paid. Adjusted cost basis starts with the original cost and is increased by purchase commissions, certain acquisition fees, and other capitalized costs, then reduced by return-of-capital distributions and applicable prior adjustments.

A capital gain results when the amount realized exceeds adjusted cost basis. A capital loss results when adjusted cost basis exceeds the amount realized. The taxable gain is not the full gross proceeds.

Example: A person sells an investment for $40,000 after paying $25,000 for it. They do not have a $40,000 taxable gain. The calculation uses the difference: $40,000 proceeds minus $25,000 adjusted basis equals a $15,000 gain. If there were $100 in selling expenses, the amount realized is $39,900 and the gain is $14,900.

Adjusted cost basis represents your tax investment in an asset. It begins with the original purchase price and may be increased or decreased by several types of adjustments.

Basis increases can include: purchase commissions, certain acquisition fees, additional investments in the property, certain capitalized costs, and other applicable adjustments that increase the tax cost.

Basis decreases can include: return-of-capital distributions that were not taxed when received, prior tax adjustments, certain reimbursements, and other applicable reductions.

Reinvested dividends generally create new purchases or additional tax lots — each reinvestment has its own acquisition date and its own basis equal to the amount reinvested. They generally do not simply add to the basis of the original lot without tracking the associated shares and acquisition dates. Review your brokerage records or year-end tax statements for per-lot detail.

Inherited and gifted property can have special basis rules — inherited property may use a stepped-up basis at the date of death, and gifted property can have dual-basis rules depending on whether there is a gain or loss at the time of transfer. These special rules are not fully calculated by this standard tool.

Direct costs of selling an investment may reduce the amount realized. Possible examples include brokerage commissions paid on the sale, exchange fees, transaction fees, certain legal costs directly associated with the sale, and other direct disposition expenses.

Do not subtract a selling expense again when it is already reflected in Form 1099-B proceeds, brokerage-reported net proceeds, adjusted basis, or a transaction-summary amount. This calculator includes an option to mark whether expenses are already reflected in proceeds.

General financial-advisor management fees, account maintenance fees, and ongoing investment expenses are not the same as direct selling commissions. Do not add ongoing management fees to basis or deduct them from sale proceeds unless they qualify as a direct selling cost for this transaction.

The holding period determines whether a capital gain or loss is short-term or long-term:

• A capital asset held for one year or less is generally short-term.
• A capital asset held for more than one year is generally long-term.

Counting generally begins the day after the acquisition date. The sale date is included in the holding period. Exact acquisition and disposition dates matter — crossing into a new calendar year does not automatically create long-term treatment.

Example: Purchased January 15, 2024. One year later is January 15, 2025 — selling on that date is still short-term (exactly one year, not more than one year). Selling on January 16, 2025 or later qualifies as long-term.

Inherited property, certain gifted property, securities transactions, short sales, and other special situations may use different holding-period rules not modeled by this standard calculator.

Net short-term capital gains are generally taxed through the ordinary federal income-tax brackets — the same brackets that apply to wages and most other ordinary income. A short-term gain is added to other ordinary taxable income. Different portions of the gain can fall within different ordinary tax brackets, so the entire gain is not necessarily taxed at the taxpayer's highest marginal rate.

This calculator estimates the transaction's incremental federal tax by comparing federal tax before and after the modeled transaction. Capital losses and carryovers are netted before the taxable short-term amount is determined. Short-term capital gains do not have one universal flat tax rate.

Standard net long-term capital gains may be taxed at 0%, 15%, or 20% under the tax-stacking method:

1. Ordinary taxable income fills the lower portion of taxable income.
2. Qualified dividends and eligible net long-term capital gain are stacked above ordinary taxable income.
3. The applicable filing-status thresholds determine how much falls within each preferential rate band.
4. Different portions of one gain may be taxed at different rates.

A taxpayer whose income crosses the 0% threshold does not pay 15% on the entire gain — only the portion above the threshold is taxed at 15%. Standard 0%, 15%, and 20% rates apply to ordinary investment assets; they do not apply to excluded special categories such as collectibles (taxed up to 28%) or unrecaptured Section 1250 gain.

The table below shows the taxable-income thresholds for the 0% and 15% long-term capital-gain bands for tax year 2026. Gain above the 15% threshold enters the 20% band.

These are taxable-income thresholds, not gain-size thresholds. Ordinary taxable income and qualified dividends can use part of the available bands. Applicable federal tax year: 2026.

Qualified dividends generally use the same preferential federal rate bands as standard net long-term capital gains. Under the stacking method, qualified dividends are placed above ordinary income first, which can reduce the amount of the 0% or 15% band available for a modeled investment gain.

Ordinary dividends are not entered in the qualified-dividend field — only dividends that qualify for the preferential rate apply. Qualified dividends must not be taxed once as ordinary income and again through the preferential-rate calculation. The calculator avoids double-counting qualified dividends. See also the Dividend Income Calculator for dividend-focused analysis.

The Net Investment Income Tax is a separate 3.8% federal tax. It is generally calculated on the lesser of net investment income or modified adjusted gross income (MAGI) above the applicable filing-status threshold. Not every capital gain is subject to NIIT — the tax applies only when MAGI exceeds the threshold.

These NIIT thresholds are different from ordinary federal income-tax brackets, long-term capital-gain rate thresholds, and standard-deduction amounts. Form 8960 can require additional adjustments that the simplified calculator does not fully reproduce.

Short-term and long-term gains and losses are initially tracked separately. The general netting sequence:

1. Net short-term gains and losses.
2. Net long-term gains and losses.
3. Offset a net loss in one category against a net gain in the other.
4. Determine whether the final result is a net short-term gain, net long-term gain, or net capital loss.
5. Apply capital-loss deduction and carryover rules.

Prior-year short-term and long-term loss carryovers retain their respective character. A combined carryover input is less accurate than separate short-term and long-term carryover information, because the two categories offset gains of different types and tax rates differently.

After capital losses offset capital gains, an individual may generally deduct a limited amount of net capital loss against ordinary income:

• Up to $3,000 for most filing statuses
• Up to $1,500 for Married Filing Separately

Additional unused loss may carry to a future tax year, retaining its short-term or long-term character. Capital-loss carryovers do not expire. The calculator's carryover estimate can be simplified when it does not have all values from the prior year's Schedule D Capital Loss Carryover Worksheet. The estimated future tax value of a carryover is not current cash proceeds from the sale.

A loss on stock or securities may be disallowed when substantially identical stock or securities are acquired during the period beginning 30 days before and ending 30 days after the sale date. That period contains 61 calendar days.

The disallowed loss may be added to the replacement investment's adjusted basis, and holding-period adjustments may also apply. Determining whether investments are substantially identical can require additional analysis beyond the transaction dates alone.

This calculator provides a warning when you indicate a potential wash sale, but does not perform a complete wash-sale calculation. A potentially disallowed loss should not be treated as definitely deductible until that analysis is complete.

These are separate concepts:

Cost basis measures your investment in the asset — it is not itself a tax. Basis represents money you already spent, which is being returned to you tax-free as part of the proceeds. Basis should not be subtracted twice from cash proceeds. A capital-loss tax benefit is not cash received at the time of sale; it reduces tax owed on other income, which is a separate benefit from the sale proceeds themselves.

State treatment of capital gains varies by jurisdiction. States can differ in tax rates, income definitions, capital-gain exclusions, deductions, loss treatment, carryover rules, basis adjustments, and local taxes. This calculator's state field is a manually entered estimate — it does not infer your state or tax rate from browser location, and a manually entered percentage is not an official state tax calculation. Review your state's tax instructions or consult a qualified tax professional for state-specific guidance.

The standard calculator does not fully calculate:

These assumptions are used to illustrate how the calculation works. All values are generated by the live calculator engine. When the 2026 federal configuration changes, this example updates automatically.

The 0% portion occurs because other taxable income ($40,000) leaves $9,450.00 of space below the 0%→15% threshold of $49,450.00. Only the remaining gain above that threshold is taxed at 15%.

The $50,000 of other income already occupies the 10% and 12% brackets. The short-term gain stacks above that income, partly in the 12% bracket and partly in the 22% bracket. The entire gain is not taxed at one flat 22% rate — the effective incremental rate is 21.6%.

Step 1: Net short-term: no ST gains, $10,000 ST loss → net ST loss of $10,000.

Step 2: Net long-term: $8,000 LT gain, no LT losses → net LT gain of $8,000.

Step 3: Cross-net: $8,000 LT gain offsets $8,000 of the $10,000 ST loss → remaining net capital loss of $2,000 (retains short-term character).

The estimated federal tax reduction is the difference between federal tax on $60,000 and federal tax on $58,000 using 2026 single brackets. This reduction is a future-tax benefit, not cash received from the sale itself.

Publisher: Smart Finance Calculators Editorial Team. This page has not been reviewed by a certified public accountant, attorney, tax professional, or investment adviser.

Validation: The calculation engine is validated against the worked examples published in IRS Publication 550, the Schedule D instructions, and the Qualified Dividends and Capital Gain Tax Worksheet. Automated tests compare engine output against those published figures.

Applicable federal tax year: 2026 · Last reviewed: August 3, 2026