Understanding Capital Gains Taxes
When you sell an investment for more than you paid, the profit is called a capital gain and is subject to tax. The tax rate depends on two factors: how long you held the asset (short-term vs. long-term) and your overall income tax bracket.
This calculator helps you understand exactly what you'll keep after taxes, so you can make informed decisions about when to sell and whether holding longer for long-term rates makes sense.
How to Use This Calculator
- Enter your buy and sell prices per share
- Enter the number of shares traded
- Add any commission or trading fees
- Select your holding period (short-term or long-term)
- Choose your federal tax bracket and state
Short-Term vs. Long-Term Capital Gains
| Tax Bracket | Short-Term Rate | Long-Term Rate |
|---|---|---|
| 10-12% | 10-12% | 0% |
| 22-35% | 22-35% | 15% |
| 37% | 37% | 20% |
Tax-Saving Strategies
- Hold investments over 1 year for lower long-term rates
- Harvest losses to offset gains (tax-loss harvesting)
- Use tax-advantaged accounts (IRA, 401k) when possible
- Consider state taxes - some states have no capital gains tax
- Time sales to manage your tax bracket
The Net Investment Income Tax (NIIT)
High earners may also owe an additional 3.8% Net Investment Income Tax on capital gains if their modified adjusted gross income exceeds $200,000 (single) or $250,000 (married filing jointly). This calculator does not include NIIT; consult a tax professional for high-income situations.