- Determine Your Capital Gain or Loss
- Capital Gain: The difference between the sale price of your asset and your “basis” (usually what you paid for it, plus commissions or fees)
- Capital Loss: If you sold the asset for less than your basis, you have a loss, which can offset gains
- Identify Holding Period
- Short-term: Asset held for one year or less. Taxed as ordinary income
- Long-term: Asset held for more than one year. Taxed at preferential rates (0%, 15%, or 20%, depending on taxable income and filing status)
- Calculate Net Capital Gain
- Add up all capital gains for the year.
- Subtract any capital losses from your gains to get your net capital gain
- Apply the Correct Tax Rate
Short-Term Capital Gains (2025)
- Taxed at your ordinary income tax rate.
- For single filers in 2025, the rates are:
- 10%: $0 – $11,925
- 12%: $11,925 – $48,475
- 22%: $48,475 – $103,350
- 24%: $103,350 – $197,300
- 32%: $197,300 – $250,525
- 35%: $250,525 – $626,350
- 37%: $626,350+
Long-Term Capital Gains (2025)
| Tax Rate | Single | Married Filing Jointly | Married Filing Separately | Head of Household |
| 0% | $0–$48,350 | $0–$96,700 | $0–$48,350 | $0–$64,750 |
| 15% | $48,351–$533,400 | $96,701–$600,050 | $48,351–$300,000 | $64,751–$566,700 |
| 20% | $533,401+ | $600,051+ | $300,001+ | $566,701+ |
- Your ordinary income fills up the lower brackets first, and capital gains are taxed at the rate for the bracket your total taxable income falls into
- Special Rates
- Collectibles and certain small business stock gains may be taxed at up to 28%
- Unrecaptured Section 1250 gains (from real estate) may be taxed at up to 25%
Example Calculations
Short-Term Gain Example (2025, Single Filer):
- Bought stock for $5,000, sold for $7,000 after 6 months.
- Gain: $2,000.
- If your total taxable income (including the gain) is $50,000, the $2,000 is taxed at the 22% ordinary income rate
Long-Term Gain Example (2025, Single Filer):
- Bought stock for $10,000, sold for $25,000 after 2 years.
- Gain: $15,000.
- If your taxable income (including the gain) is $65,000:
- First $48,350 of income is taxed at 0% for capital gains.
- The remainder ($16,650) falls into the 15% bracket, so your gain is taxed at 15%
Calculation Steps in Summary
- Find your basis (purchase price + fees).
- Subtract basis from sale price to get gain/loss.
- Determine holding period (short-term vs. long-term).
- Add up all gains and subtract losses for net gain.
- Apply appropriate tax rate based on holding period, taxable income, and filing status
Additional Notes
- High earners may owe an extra 3.8% Net Investment Income Tax (NIIT)
- State taxes may also apply, with rates and rules varying by state