Capital gains tax FAQ

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

It comes down to how long you held the asset. Sell one year or less after buying and the profit is a short-term gain, taxed as ordinary income at federal rates from 10% to 37%. Hold more than one year and it becomes a long-term gain, taxed at the lower 0%, 15%, or 20% rates. Crossing the one-year line is often the single biggest lever on your tax bill.

What are the 2026 long-term capital gains tax rates?

Long-term gains are taxed at 0%, 15%, or 20% depending on your taxable income. For 2026, single filers pay 0% up to $49,450 of taxable income, 15% up to $545,500, and 20% above that. The gain stacks on top of your ordinary income, so one sale can be taxed partly at 0% and partly at 15%. See the full guide for the married and head-of-household brackets.

When do I owe capital gains tax?

Only when you realize the gain by selling or otherwise disposing of the asset. An investment that has grown in value but that you still hold owes nothing. The tax is reported on your return for the year of the sale, and a large gain may require estimated quarterly payments.

Are crypto gains taxed the same as stocks?

Yes. The IRS treats cryptocurrency as property, so the same short-term and long-term rules and rates apply. That includes crypto-to-crypto trades, which count as taxable events even if you never convert back to dollars.

What is the NIIT and who pays it?

The net investment income tax (NIIT) is an extra 3.8% federal tax on investment income, including capital gains. It applies to taxpayers with modified adjusted gross income above $200,000 for single or head-of-household filers and $250,000 for married filing jointly. It is charged on top of the regular capital gains tax, pushing the top long-term rate to 23.8%.

Do I pay state tax on capital gains?

In most states, yes. Most states tax capital gains as ordinary income at their regular rates. Eight states have no personal income tax at all: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming. Washington is a special case, taxing certain long-term gains through an excise tax while exempting real estate. The calculator estimates state tax for whichever state you choose.

How does the home sale exclusion work?

If you sell your primary home, you can exclude up to $250,000 of gain, or $500,000 if married filing jointly, as long as you owned and lived in it as your main residence for at least 2 of the last 5 years. Only gain above your exclusion is taxable, and because of the 2-year rule it is taxed at long-term rates. Vacation homes and rentals do not qualify. See the home-sale exclusion guide for the details.

Can capital losses reduce my tax?

Yes. Capital losses first offset your capital gains dollar for dollar. If your losses exceed your gains, you can deduct up to $3,000 against ordinary income per year, and any remaining loss carries forward to future years. Watch the 30-day wash-sale rule if you plan to buy back the same investment.

Is this calculator private and free?

Yes to both. Every calculation runs locally in your browser, so none of the numbers you type are uploaded or stored. The tool is free to use with no sign-up.