When you sell capital assets, you’ll have to be aware of something called capital gains tax.
Calculating your capital gains tax can be pretty confusing. The tax rates depend on how long you’ve held the asset and your overall tax bracket.
To help, we’ve built a calculator to do the math for you. Just enter some basic information about yourself, and our capital gains tax calculator will estimate how much capital gains tax you'll owe.
Want to know more about capital gains taxes? We’ve got you covered.
How does capital gains tax work?
The capital gains tax is what you pay on any capital asset that appreciates (or increases) in value while you own it.
“Capital assets” are investment or personal assets with any kind of resale value. “Almost everything you own and use for personal investment purposes is considered a capital asset,” according to the IRS.
This could include:
- Land or real estate
- Memorabilia and collectible items, like coins
- Art
- Stocks and bonds
- Cryptocurrency and NFTs
What are capital gains?
If you sell your capital asset for more than you bought it, you’ll have a capital gain. If you sell the asset for less than you bought it, you’ll have a capital loss.
Much of what you own over time will depreciate in value, but some assets, like property, art, or vintage cars, will appreciate over time, and when you sell those items, you’ll profit off of them. (If you’ve sold cryptocurrency, like bitcoin, for a gain, you’ll be liable for capital gains taxes too). The IRS considers any profit you make from selling capital assets — those capital gains — to be income.
What is capital gains tax?
“Capital gains tax” refers to the difference between how much you paid for a capital asset and what you sold it for. The amount of capital gains tax you’ll pay depends on several factors, including:
- The length of time you’ve owned the asset
- The cost of owning the asset, including any fees you paid on it
- Your income tax bracket
- Your marital status
The capital gains tax is calculated by taking the total price you sold the asset for and deducting the original cost. You only have to pay taxes when you sell the asset — not while you’re holding onto it. When you sell a capital asset, those capital gains become “realized gains.” While you own the capital asset, they’re called “unrealized gains,” and you won’t have to pay capital gains taxes if you don’t sell.
Long-term vs. short-term capital gains
The length of time you’ve owned an asset will determine what kind of capital gains you have. Capital gains taxes are divided into two big groups: short-term and long-term.
Short-term capital gains tax refers to the profits you make from selling something you’ve owned for less than a year. They’re paid at the same rate as the taxes you’d pay on your usual income — like wages you make from work.
On the other hand, long-term capital gains tax is the tax applied to assets you’ve held for more than a year. Depending on your income, long-term capital gains tax rates are 0 percent, 15 percent, and 20 percent. These rates tend to be significantly lower than the ordinary income tax rate.
Sales of real estate and other types of assets have their own specific form of capital gains, and have their own rules.
Capital gains tax rates
Here’s what you should know about capital gains rates for the 2023 and 2024 tax years.
Long-term capital gains tax rates for the 2023 tax year
| FILING STATUS | 0% RATE | 15% RATE | 20% RATE |
|---|---|---|---|
| Single | Up to $44,625 | $44,626 – $492,300 | Over $492,300 |
| Married filing jointly | Up to $89,250 | $89,251 – $553,850 | Over $553,850 |
| Head of household | Up to $59,750 | $59,751 – $523,050 | Over $523,050 |
Long-term capital gains tax rates for the 2024 tax year
| FILING STATUS | 0% RATE | 15% RATE | 20% RATE |
|---|---|---|---|
| Single | Up to $47,025 | $47,026 – $518,900 | Over $518,900 |
| Married filing jointly | Up to $94,050 | $94,051 – $583,750 | Over $583,750 |
| Head of household | Up to $63,000 | $63,001 – $551,350 | Over $551,350 |
In other words, for tax year 2023, you won’t pay any capital gains tax if your total taxable income is $44,625 or less and you’re filing individually. You’ll pay 15 percent on capital gains if your income ranges from $44,626 to $492,300. Above that income level, the rate goes up to 20 percent.
These numbers change slightly for 2024. For the 2024 tax year, you won’t pay any capital gains tax if your total taxable income is $47,025 or less. The rate goes up to 15 percent on capital gains if you make between $47,026 and $518,900. Above that income bracket, the rate jumps to 20 percent.
These capital gains may also be subject to the net investment income tax (NIIT), an additional 3.8 percent tax, if your income is above certain levels.
The income thresholds that might make you subject to the net investment income tax are:
- Single or head of household: $200,000
- Married, filing jointly: $250,000
- Married, filing separately: $125,000
- Qualifying widow(er) with dependent child: $250,000
For short-term capital gains, the tax brackets for regular income taxes apply. The 2023-2024 tax brackets are 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent, and 37 percent. There’s no 0 percent rate or 20 percent ceiling for short-term capital gains taxes.
What should you enter into this capital gains tax calculator?
Here are the fields you'll fill in:
Value at time of purchase
This refers to how much your capital asset cost when you bought it.
Value at time of sale
In this field, input the value of your asset when you sold it.
Length of ownership
Indicate how long you’ve owned the asset. This will determine whether you have short-term or long-term capital gains.
State of residence
Different states have different tax rules. Pick the state you lived in when the sale occurred.
Tax filing status
These will look familiar to you if you’ve filed taxes before. Your options are:
- Single
- Married filing jointly
- Head of household
If you're married and filing separately, select "single."
Annual income
Income is a factor in capital gains taxes, so put your total annual income in this field.
Once you put in your information, our calculator will estimate your capital gains taxes — and break it down by federal and state taxes.
How to report capital gains and losses on your tax return
When it comes time to do your taxes, you’ll report capital gains and losses on a tax form called Schedule D. This is basically an addendum to Form 1040, the individual tax return everyone fills out.
To file Schedule D, there’s a chance you may need to use information from other forms. There are a bunch you might need, but Form 8949 is the main one you should keep in mind.
Using Form 8949, you’ll calculate your total short-term and long-term capital gains and losses for the year. For more details, review our guide on Form 8949. Think of Form 8949 as step #1, and Schedule D as step #2 — some of the figures you calculate on Form 8949 will fill in some of the boxes on Schedule D.
Form 8949 contains a lot of the same information as Schedule D, but you’ll still need to fill out both for eligible capital gains and losses.
And just like that, you’ve calculated your capital gains and losses! Be sure to visit Keeper’s Free Resources page for more tips and free tools, or download our app for more freelance-friendly tax insights.
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