What are Capital Gains?

The internal revenue service taxes different kinds of income at different rates. Capital gains are as profits from the sale of capital assets, such as stock, a business asset, a parcel of land, or a owrk of art. A capital gain is realised when a capital asset is sold at a price at a price higher than its basis. The basis of a capital asset is the purchase price, plus commisision and the cost of improvements less depreciation. A capital loss occurs when an asset is sold for less than its basis.

How Capital Gains Taxed

Capital gains are generally taxed at different rates than your wages and salaries. How much these capital gains are taxed dependent on how long you held the asset before selling.

What is short-term capital gains tax?

Short-term capital gains are profits from the sale of assets held for one year or less. The short-term capital gains are taxed at your ordinary income tax rate, depending on the taxable income level.

What is long-term capital gains?

Long-term capital gains are profits from the sale of assets held more than one year. They are generally lower than short-term capital gains tax rates. The long-term capital gains tax rate is 0%, 15% or 20% depending on your taxable income and filing status. Taxpayers with modified gross income above a certain threshold are subject to an additional 3.8% net investment income tax (NIIT)

Different types taxed at different rate


Capital gains tax rates

Tax Year:
Filing Status:
If your taxable income is between... your tax bracket is:
and %
and %
and %

3.8% surtax on the net investment income

some taxpayer may owe additional 3.8% surtax on the net investment income that applies to which is smaller: your net investment income or the amount by which your modified adjusted gross income exceeds the amount listed below.

Tax RateSingleMFJ or QWHHMFS
3.80%200,000+250,000+200,000+125,000+
2026 uses the Rev. Proc. 2025-32 breakpoints; 2025 uses Rev. Proc. 2024-40. The 0/15/20 percent rate structure is the same both years.
Married filing separately halves the annual deduction limit to $1,500. Every other status uses the $3,000 limit. Filing status sets the 0 percent and 15 percent breakpoints. Qualifying surviving spouse uses the married filing jointly amounts.
Wages, pensions and other income that is not investment income.
Interest, non-qualified dividends, rents, royalties and similar income, after the expenses that belong to it. It is taxed as ordinary income and counted as net investment income for the NIIT.
Only qualified dividends get the preferential rate. Enter ordinary (non-qualified) dividends as part of taxable income, not here.
Gains on assets held one year or less (Schedule D, Part I). Enter the total before netting.
Losses on assets held one year or less, already adjusted for any wash sales. Include any prior-year short-term carryover here.
Losses on assets held one year or less, already adjusted for any wash sales. Include any prior-year short-term carryover here.
Gains on assets held more than one year (Schedule D, Part II). Enter the total before netting.
Losses on assets held more than one year. Include any prior-year long-term carryover here.
Losses on assets held one year or less, already adjusted for any wash sales. Include any prior-year short-term carryover here.
Losses on assets held more than one year. Include any prior-year long-term carryover here.
Losses on assets held more than one year. Include any prior-year long-term carryover here.
Losses on assets held more than one year. Include any prior-year long-term carryover here.
Your AGI (plus certain foreign exclusions). Used only to test the net investment income tax threshold ($200K single, $250K MFJ, $125K MFS). Leave at your AGI.
Enter your capital gains and losses to see this
year's deduction and your carryover to next year