Capital Gains Calculator

What is capital gains tax?

Capital gains tax is a tax on the profit made from selling an investment or asset. The tax rate depends on how long you held the asset:

• Short-term capital gains (held ≤ 1 year) are taxed as ordinary income at rates from 10% to 37%
• Long-term capital gains (held > 1 year) are taxed at preferential rates of 0%, 15%, or 20% depending on your income

This tax applies to stocks, bonds, cryptocurrency, real estate, and other investment assets.

What's the difference between short-term and long-term capital gains?

The key difference is the holding period and tax rate:

• Short-term: Assets held for 1 year or less, taxed at ordinary income rates (10%-37%)
• Long-term: Assets held for more than 1 year, taxed at preferential rates (0%, 15%, or 20%)

Long-term capital gains rates are typically much lower than short-term rates, which is why many investors try to hold assets for at least one year before selling.

Do capital losses reduce my taxes?

Yes, capital losses can offset capital gains and reduce your tax bill:

• Offset gains: Capital losses reduce capital gains dollar-for-dollar
• Deduct against income: If losses exceed gains, you can deduct up to $3,000 per year against ordinary income ($1,500 if married filing separately)
• Carry forward: Excess losses can be carried forward to future tax years indefinitely

This is the basis for "tax-loss harvesting," where investors strategically sell losing positions to offset gains and reduce taxes.

Do I pay capital gains tax on cryptocurrency?

Yes, the IRS treats cryptocurrency as property, so capital gains tax applies when you sell crypto for a profit. The same short-term vs long-term rules apply: if you hold crypto for more than one year, you qualify for lower long-term capital gains rates. Even crypto-to-crypto trades are taxable events.

Are there any states with no capital gains tax?

States with no income tax also have no state capital gains tax: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming. New Hampshire only taxes dividend and interest income, not capital gains.