Tax Planning
Capital Gains Tax
Calculator
Used to determine your tax bracket
How capital gains tax works
When you sell an investment or asset for more than you paid, the profit is called a capital gain. The IRS taxes that profit — but how much you pay depends almost entirely on how long you owned the asset before selling.
Short-term gains (assets held one year or less) are taxed as ordinary income — the same rate you pay on your salary or freelance income. For most people with a job, that means 22%, 24%, or even 32%.
Long-term gains (assets held more than one year) get preferential tax rates: 0%, 15%, or 20%. A married couple with $100,000 in ordinary income could sell a stock for a $50,000 long-term gain and pay exactly 0% tax on that gain. The same gain sold short-term would cost them $11,000 or more.
If you sell for less than you paid, that's a capital loss. Losses offset gains dollar-for-dollar, and up to $3,000 of excess loss can reduce your ordinary income each year.
Long-term rates (2025)
0% up to $47,025 · 15% $47,026–$518,900 · 20% over $518,900 (single filer)
Short-term rates
Taxed at your ordinary income bracket — 10% to 37% depending on total income.
Why this matters more than you think
Most investors focus entirely on returns — "I made 20% on that trade!" — and ignore the tax bill waiting for them in April. A $10,000 short-term gain for someone in the 24% bracket costs $2,400 in taxes. The same gain held for one more day (crossing into long-term) costs $1,500 at 15% — or $0 if their total income stays under $47,000.
The difference between short-term and long-term treatment is often larger than the difference between two competing investment strategies. You can pick the wrong stock and still come out ahead of someone who picked the right stock but sold it too early.
Understanding your gain type before you sell gives you a choice. Without it, you're guessing — and the IRS doesn't guess in your favor.
Four ways to pay less
01
Wait one year
The single most effective strategy. If you're close to the one-year mark, waiting a few weeks or months can cut your tax rate by half or more. Mark your purchase dates.
02
Harvest losses
Sell underperforming investments before year end to offset gains. If you have more losses than gains, up to $3,000 can reduce your ordinary income. Unused losses carry forward indefinitely.
03
Use retirement accounts
Trades inside a 401(k), traditional IRA, or Roth IRA generate no capital gains tax at the time of sale. That's the law's biggest loophole — use it.
04
Time your income
If you're retiring or taking a low-income year, sell appreciated assets then. The 0% long-term bracket exists — you just need your total income low enough to qualify.
Real examples
Example 1: You earn $60,000 at your job and sell crypto for a $10,000 gain after 10 months (short-term). Your tax rate is 22%. You owe $2,200.
Example 2: Same $60,000 salary, same $10,000 gain, but you waited 14 months (long-term). Your total income is $70,000, which falls in the 15% long-term bracket. You owe $1,500 — saving $700.
Example 3: You're retired with $40,000 in ordinary income. You sell stock for a $20,000 long-term gain. Total income $60,000. The first $7,025 of your gain fills the 0% bracket; the remaining $12,975 is taxed at 15%. Total tax: $1,946. If you had sold short-term, your rate would be 12% on the whole gain: $2,400.
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