2026 Capital Gains Tax Calculator

How capital gains tax works

A capital gain is the profit when you sell an asset for more than it cost you. The tax is charged on that profit, not on the sale price: sell for $300,000 something you bought for $100,000 and you have a $200,000 gain, whatever the headline number on the contract says. Your cost is your adjusted basis — broadly the purchase price, plus improvements and acquisition costs, less any depreciation you have claimed.

Two things then decide what you pay. The first is how long you held the asset. More than a year and the gain is long-term, eligible for preferential rates of 0%, 15% or 20%. A year or less and it is short-term, taxed as ordinary income at rates up to 37%. The second is how much other income you have, because long-term gains are not taxed in isolation.

Nothing is taxed until you sell. An investment that has quadrupled on paper generates no liability at all while you hold it, which is why the timing of a disposal is one of the few genuinely powerful levers an ordinary taxpayer has.

Your gain sits on top of your other income

This is the part most calculators hide, and it is the reason two people with identical gains can owe very different amounts. Long-term gains are stacked on top of your ordinary income. Your salary and other ordinary income fill the lower brackets first; the gain sits above it, and the rate it attracts depends on where that stack lands.

The consequence is that the 0%, 15% and 20% thresholds are measured against your total taxable income, not against the gain alone. A $40,000 gain can be taxed entirely at 0% for someone with little other income, entirely at 15% for someone earning a professional salary, and split across 15% and 20% for someone with a large income. The gain never changed; the stack underneath it did.

A gain can also straddle a boundary, with part taxed at one rate and the remainder at the next. That is not an edge case — it is the normal outcome for any sale large enough to push a taxpayer across a ceiling, and it is why a single "capital gains rate" is a fiction.

2026 federal capital gains rates by filing status

The long-term rate ladder has three steps, and each filing status has its own two breakpoints. These are the figures from Rev. Proc. 2025-32 § 4.03, stated as levels of taxable income — that is, after your standard or itemised deduction.

Note how much the joint figures are worth. A married couple can hold nearly $98,900 of taxable income and still pay nothing on a long-term gain. Note too that married filing separately gets exactly half the joint ceilings, which is one of several reasons that election rarely helps.

The standard deduction sits underneath all of this and is worth stating, because it is what separates the gross income you know from the taxable income these ceilings measure: $16,100 single, $32,200 joint, $24,150 head of household.

Short-term versus long-term

The holding-period line is the single largest lever in the whole system, and it is binary. Hold an asset for one year or less and the gain is short-term, added to your ordinary income and taxed at your marginal rate — up to 37% federally. Hold it for more than a year and the same gain becomes long-term, eligible for 0/15/20%.

The measurement is precise: the holding period begins the day after you acquire the asset and ends on the day you dispose of it. "More than one year" means exactly that, so a sale on the first anniversary is still short-term. Selling one day later can change the rate on the entire gain.

A short-term gain also behaves differently in the calculation. It has no rate band of its own — it simply raises your ordinary income, which means it can push your other income into a higher bracket and, separately, push your long-term gains further up their own ladder. That interaction is invisible in any tool that reports a single blended rate.

The 3.8% net investment income tax

Above certain income levels a further 3.8% applies to investment income, including capital gains. It is charged on the lesser of your net investment income or the amount by which your modified adjusted gross income exceeds a threshold: $200,000 for single and head-of-household filers, $250,000 filing jointly, and $125,000 married filing separately.

The "lesser of" construction matters enormously and is almost always reported wrongly. Crossing the threshold by $100 does not subject your whole gain to 3.8% — it subjects $100 to it, costing $3.80. The tax phases in gradually as your income rises above the line, reaching its full extent only once the excess exceeds your investment income.

Two details are worth holding onto. First, the relevant measure is modified adjusted gross income, computed before your standard or itemised deduction — so you can owe this tax at an income level where your taxable income looks comfortably under the threshold. Second, these thresholds are written into the statute and are not adjusted for inflation. They have been unchanged since the tax took effect in 2013, so every year of wage growth pulls more households across them.

What "effective rate" should mean

This is where our answer diverges from most of the calculators you will find, and the difference is worth stating plainly because it is checkable.

We report the effective rate against the gain: the extra tax the sale caused, divided by the gain itself. That answers the question people actually have, which is "what did selling this cost me?"

The common alternative is to divide total tax by total income. That is not wrong arithmetic, but it answers a different question: it blends in the tax you would have owed on your salary anyway, and then labels the result as the cost of your sale.

How much the two diverge depends on the gain. For a long-term gain the gap is usually under a percentage point, because the gain is taxed at a preferential rate that is not far from the blended average. For a short-term gain the gap is large — the sale is taxed at your top marginal rate while the average is dragged down by all the income taxed in the brackets beneath it. The example below is the second case, and it is the one where a total-income effective rate misleads badly.

Selling your home: the Section 121 exclusion

If you sell a home you have lived in, you can exclude up to $250,000 of gain, or $500,000 on a joint return. The tests are ownership and use: you must have owned the home for at least two of the five years before the sale, and lived in it as your main home for at least two of those same five years. The two periods do not have to coincide. You also must not have claimed the exclusion on another home within the previous two years.

These amounts are statutory and have never been indexed, which is increasingly the binding constraint. In high-cost markets a couple can exceed the $500,000 exclusion on an ordinary family home, and the excess is a straightforward long-term capital gain.

The partial exclusion is more generous than it looks

If you sell early because of a change in place of employment, a health reason, or an unforeseen circumstance, you may qualify for a reduced exclusion. The crucial detail — and the one most often implemented incorrectly — is that the proration applies to the maximum exclusion amount, not to your gain.

Someone who owned and occupied a home for twelve of the required twenty-four months gets half the maximum exclusion, which is $125,000 single. If their gain was $100,000, the whole of it is still excluded and they owe nothing. Prorating the gain instead — which is the intuitive but wrong reading — would tax half of it. The distinction is worth several thousand dollars to anyone who sold early with a modest gain.

Depreciation is never excluded

If the property was ever rented, depreciation claimed after 6 May 1997 cannot be excluded, however well you meet the ownership and use tests. It comes off the top and is taxed as unrecaptured Section 1250 gain at up to 25%.

Rental property: Section 1250 depreciation recapture

Selling a rental introduces a second rate. While you owned the property you claimed depreciation, reducing your taxable income each year and also reducing your basis. On sale, the part of your gain attributable to that depreciation does not get the 0/15/20% treatment. It is unrecaptured Section 1250 gain, taxed at up to 25%.

Two details decide how much this costs. The amount is the lesser of the depreciation you claimed and your total gain — so a property depreciated heavily but sold for a modest profit does not manufacture recapture out of nothing; the gain caps it, and the remaining depreciation is simply never recaptured.

And 25% is a maximum, not a flat rate. A taxpayer whose ordinary marginal rate is 22% pays 22% on this gain, not 25%. The cap only binds once your ordinary rate exceeds it. In the stack, this slice sits above your ordinary income but below your ordinary long-term gain, which pushes the rest of the gain further up its ladder.

Note also that depreciation is recaptured on the basis of what was allowed or allowable. If you were entitled to claim depreciation and did not, it is still recaptured on sale — failing to claim it does not avoid the tax.

Offsetting gains with losses

Losses net against gains, in a defined order. Short-term losses first offset short-term gains and long-term losses offset long-term gains; any remaining loss of one character then offsets the net gain of the other. If you finish the year with a net capital loss, you can deduct up to $3,000 against ordinary income — $1,500 if married filing separately.

Anything beyond that carries forward indefinitely, keeping its short-term or long-term character. There is no expiry and no carryback for individuals. The $3,000 figure is statutory and has been unchanged since 1978, so its real value has eroded by decades of inflation — a large loss can take a very long time to use up.

One trap worth naming: the wash sale rule disallows a loss if you buy a substantially identical security within thirty days before or after the sale. This calculator takes your net gain as given and does not detect wash sales.

State capital gains tax

Federal tax is only part of the bill. Most states tax capital gains as ordinary income with no preferential rate at all, which means a gain that is federally cheap can still be expensive where you live. A handful of states levy no income tax; one — Washington — levies no income tax but does tax long-term gains through a separate excise.

We currently compute 18 of 51 jurisdictions, and the calculator lists the rest as not yet available rather than omitting them, so a missing state can never be mistaken for a state with no tax. Detailed pages for the ten largest:

• California — Up to 13.3%Taxed as ordinary income, nine brackets, plus a 1% surcharge over $1m.
• Texas — No state taxNo individual income tax. Federal tax still applies in full.
• Florida — No state taxNo individual income tax. Federal tax still applies in full.
• New York — Up to 10.9% + city taxOrdinary income, nine brackets to 10.9%. NYC and Yonkers add their own.
• Washington — 7% / 9.9% exciseNo income tax, but a 7% / 9.9% excise on long-term gains. Real estate exempt.
• Illinois — Flat 4.95%Flat 4.95% on everything. No preferential rate, no exclusion.
• Pennsylvania — Flat 3.07%Flat 3.07%, no holding-period distinction, and unusual loss rules.
• Ohio — Flat 2.75%A single 2.75% rate from 2026, above an indexed floor.
• New Jersey — Up to 10.75%Ordinary income to 10.75%. Fixed thresholds, and no loss carryforward.
• Colorado — Flat 4.40%Flat 4.40%. The old capital gain subtraction appears to be gone.

Planning levers that actually work

Cross the one-year line. The largest single saving available to most people is simply waiting. Moving a sale from day 365 to day 366 can take the rate on the whole gain from 37% to 20% or lower.

Use a low-income year. Because the rate depends on total taxable income, a year with reduced earnings — a sabbatical, a career change, early retirement before pensions start — can put a substantial gain in the 0% band. This is the most under-used lever in the system.

Split a disposal across tax years. Selling half in December and half in January gives each portion its own stack, which can keep both under a ceiling that a single sale would cross. Useful federally; worth nothing in a flat-rate state.

Harvest losses deliberately. Realising losses to offset gains in the same year is straightforward and effective, subject to the wash sale rule.

Mind the NIIT threshold. Because the tax applies to the lesser of two figures, keeping modified AGI just below the threshold can remove it entirely — and because it is measured before deductions, the lever is income timing rather than deductions.

Check the state consequence before you move a sale. Deferring into next year to save federally is a poor trade if your state rate rises, or if you are moving to a higher-tax state in between.

Common mistakes

Treating the rate as a property of the gain. It is not. The same gain attracts different rates for different people, because it is stacked on different incomes.

Applying 3.8% to the whole gain on crossing the NIIT threshold. It applies to the lesser of net investment income and the excess over the threshold.

Prorating the gain for a partial home-sale exclusion. The proration applies to the maximum exclusion, not to the gain — and the difference usually favours the taxpayer.

Assuming depreciation recapture is always 25%. It is a maximum. Below the 25% bracket you pay your ordinary rate.

Forgetting the state. Most states give capital gains no preferential treatment, so someone paying 0% federally can still owe several thousand at home.

Reading an effective rate computed against total income. It answers a different question and understates what the sale cost you.

Frequently asked questions

Sources

Inflation-adjusted figures for tax year 2026 come from Rev. Proc. 2025-32 (I.R.B. 2025-45). The 2026 adjusted items are in Section 4 of that document — the widely repeated "§ 3.03" citation for the capital gains table is the previous year's numbering and is wrong for 2026.

Statutory figures that are not indexed — the net investment income tax under IRC 1411, the capital loss limitation under IRC 1211(b), the 25% and 28% maximum rates under IRC 1(h), and the Section 121 exclusion amounts — are cited to the Internal Revenue Code. Method for the home-sale exclusion follows IRS Publication 523; depreciation recapture follows Publication 544; netting and carryforward follow Publication 550. State rules are cited to each state's own tax code.

Every figure and its authority is listed on the methodology page, including an explicit list of what this calculator does not model. Every worked example above was generated by the calculator's own engine when this page was built, so the prose here cannot drift away from the tool.