Capital Gains Tax Calculator with NIIT

Frequently Asked Questions

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

Short-term (held one year or less) is taxed as ordinary income, up to 37% federal in 2025. Long-term (held more than one year) is taxed at 0%, 15%, or 20%. The hold-period difference can cut your tax bill in half.

What are 2025 long-term capital gains brackets?

0% rate applies up to about $48,350 single / $96,700 married filing jointly (taxable income). 15% applies up to about $533,400 single / $600,050 MFJ. 20% above those thresholds. Plus 3.8% NIIT for high earners.

How can I minimize capital gains tax?

Hold positions over a year, harvest losses to offset gains, donate appreciated shares to charity (no gain recognized + deduction), use specific-lot identification, and bunch capital gains into low-income years (e.g., early retirement before Social Security).

What is the step-up in basis?

When you inherit assets, cost basis resets to fair market value at date of death. Heirs pay tax only on gains from that point forward. This makes "buy and hold until death" extremely tax-efficient for highly appreciated assets.

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This calculator provides estimates for educational purposes only and is not investment advice. Past performance does not guarantee future results. Consult with a qualified financial advisor before making investment decisions. All investments carry risk, including potential loss of principal.

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How This Calculator Works

You enter your capital gain, holding period (short or long), filing status, and your other taxable income. The calculator stacks the gain on top of your existing income so it lands in the correct brackets rather than being taxed in isolation. For a short-term gain (held under a year) it applies the 2026 ordinary-income brackets - 10% through 37%. For a long-term gain (held more than a year) it applies the preferential 0%/15%/20% brackets, which depend on where your total income falls. It then adds the 3.8% Net Investment Income Tax (NIIT) where applicable, sums everything, and reports total tax, after-tax proceeds, your effective rate on the gain, and your marginal rate.

2026 Rates and the NIIT Method

Long-term brackets: 0% up to $48,350 single / $96,700 married filing jointly; 15% up to $533,400 / $600,050; 20% above. The bracket-stacking routine fills each rate slab in turn from your base income upward, so a gain that straddles two brackets is split correctly. NIIT applies 3.8% to the lesser of your investment income (the gain) or the amount your modified AGI exceeds $200,000 (single) / $250,000 (MFJ). Effective rate = total tax ÷ gain; marginal rate is the rate on the next dollar of gain.

Worked Example

A single filer with $90,000 of other taxable income sells stock for a $20,000 long-term gain. The first slice fills the remaining room below $533,400 at the 15% rate, so the base tax is $3,000. Total income of $110,000 is below the $200,000 NIIT threshold, so no NIIT applies. Total tax is $3,000, after-tax gain is $17,000, and the effective rate is 15%. Flip the holding period to short-term and the same $20,000 is taxed at ordinary 22–24% marginal rates - roughly $4,500, a meaningful penalty for selling early.

Common Mistakes

Selling one day before the one-year mark - the difference between short- and long-term treatment can be 10–20 percentage points.

Assuming the long-term rate is a flat 15%; it is 0%, 15%, or 20% depending on total income, and the gain itself can push you across a threshold.

Forgetting the NIIT - high earners owe an extra 3.8% that surprises many at filing time.

Ignoring state capital gains tax, which this federal-only tool does not include.

Tips & FAQ

Strategies to lower the bill include holding at least 366 days for long-term rates, harvesting losses to offset gains, donating appreciated shares to charity (avoiding the gain entirely), keeping high-turnover positions inside an IRA or 401(k), and the step-up in basis that erases unrealized gains at death. The "held more than one year" test is measured from the day after purchase to the sale date. These are 2026 federal estimates for educational use only - consult a tax professional for your specific situation.

Capital Gains Tax Calculator with NIIT

Frequently Asked Questions

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