Long-term vs. short-term: the one-year line worth thousands
Hold an asset more than one year before selling and your profit is a long-term capital gain, taxed at preferential rates of 0%, 15%, or 20%. Sell at one year or less and it's a short-term gain, taxed as ordinary income at rates up to 37%. For someone in the 24% bracket, waiting a few extra weeks to cross the one-year mark cuts the tax on a gain by more than a third.
2026 long-term capital gains brackets
| Rate | Single — taxable income | Married filing jointly | Head of household |
|---|---|---|---|
| 0% | Up to $49,450 | Up to $98,900 | Up to $66,200 |
| 15% | $49,450 – $545,500 | $98,900 – $613,700 | $66,200 – $579,600 |
| 20% | Over $545,500 | Over $613,700 | Over $579,600 |
For tax year 2025, the 0% rate covers taxable income up to $48,350 (single) and $96,700 (joint); the 20% rate starts at $533,400 and $600,050 respectively.
How gains "stack" on your other income
The most misunderstood part: long-term gains sit on top of your ordinary taxable income. If your salary uses up taxable income to $40,000 and you realize a $30,000 long-term gain in 2026 as a single filer, the first $9,450 of the gain fills the rest of the 0% zone (up to $49,450) and is completely tax-free; the remaining $20,550 is taxed at 15%. This calculator does the stacking automatically and shows each slice.
The 3.8% net investment income tax (NIIT)
High earners pay an extra 3.8% on investment income once modified AGI exceeds $200,000 (single) or $250,000 (married filing jointly). It applies to the lesser of your net investment income or the amount above the threshold — turning the top capital gains rate into an effective 23.8%.
Crypto, home sales, and other special cases
- Cryptocurrency is property in the eyes of the IRS: every sale, swap, or purchase made with crypto is a taxable event with the same long/short-term rules.
- Your primary home: up to $250,000 of gain ($500,000 married) is excluded if you owned and lived in it for 2 of the last 5 years.
- Tax-loss harvesting: capital losses offset gains dollar-for-dollar, plus up to $3,000 of ordinary income per year; the rest carries forward indefinitely.
- Collectibles (art, gold coins) have their own 28% maximum rate.
How this calculator works
The tool first determines whether your gain is short-term (held one year or less, taxed at ordinary rates) or long-term (taxed at 0%, 15%, or 20%). For long-term gains it stacks the gain on top of your ordinary income and applies the 2026 capital-gains brackets, so part of a gain can fall in the 0% band while the rest reaches 15%. It also adds the 3.8% Net Investment Income Tax where income exceeds $200,000 single / $250,000 joint. Full detail is in the capital gains guide.
Worked example
A single filer with $60,000 of ordinary income and a $20,000 long-term gain pays 15% on the gain ($3,000), because their income sits above the $49,450 zero-rate ceiling. The same gain on an asset held under a year would be taxed at their 22% ordinary rate ($4,400) — a $1,400 penalty for selling early.
Sources & method: IRS Rev. Proc. 2025-32 (2026 capital-gains thresholds); IRC §1411 (NIIT). See our methodology for how every figure is verified.