Financial Calculators

Calculate How Much Capital Gains Tax You Will Owe With This Simple Calculator

Calculate how much capital gains tax you will owe with this simple calculator

Calculate how much capital gains tax you will owe with this simple calculator

Tax year
\$
\$
\$0
Enter your 2022 taxable income (excluding the capital gain)
\$
\$0
Enter the time from purchase to sale

 ◦How much is capital gains tax? ◦What is short-term capital gains tax? ◦Capital gains tax rates for 2022 and 2023 ◦Collectible assets and the net investment income tax ◦How to avoid, reduce, or minimize capital gains taxes ◦FAQs:

How much is capital gains tax?

Capital gains tax is a tax on the profit made from the sale of assets such as stocks, real estate, or mutual funds. The tax is calculated as a percentage of the gain realized from the sale of the asset. The rates at which capital gains are taxed vary depending on a number of factors, including the type of asset being sold, the length of time the asset was held, and the taxpayer's income level.

How capital gains taxes work

When an asset is sold for more than its purchase price, a capital gain is realized. For example, if an investor buys stock for \$1,000 and sells it for \$1,500, they have a capital gain of \$500. This \$500 is subject to capital gains tax.
The capital gains tax is calculated based on the net capital gain, which is the difference between the sale price of the asset and its cost basis (i.e., the purchase price plus any commissions or fees paid to buy or sell the asset). The tax is only owed on the net gain, not on the full sale price.

What is long-term capital gains tax?

Long-term capital gains tax applies to the sale of assets that have been held for more than one year. The long-term capital gains tax rates are generally lower than the short-term capital gains tax rates. For 2022, the long-term capital gains tax rates range from 0% to 20%, depending on the taxpayer's income level and filing status. For 2023, the long-term capital gains tax rates range from 0% to 20% as well.

What is short-term capital gains tax?

Short-term capital gains tax applies to the sale of assets that have been held for one year or less. Short-term capital gains are taxed at the same rate as ordinary income, according to the federal income tax brackets. This means that the tax rate varies based on the taxpayer's income level and filing status.

Capital gains tax rates for 2022 and 2023

Capital gains tax rates for 2022
Tax-filing status
0% tax rate
15% tax rate
20% tax rate
Single
\$0 to \$41,675.
\$41,676 to \$459,750.
\$459,751 or more.
Married, filing jointly
\$0 to \$83,350.
\$83,351 to \$517,200.
\$517,201 or more.
Married, filing separately
\$0 to \$41,675.
\$41,676 to \$258,600.
\$258,601 or more.
\$0 to \$55,800.
\$55,801 to \$488,500.
\$488,501 or more.
Capital gains tax rates for 2023
Tax-filing status
0% tax rate
15% tax rate
20% tax rate
Single
\$0 to \$44,625.
\$44,626 to \$492,300.
\$492,301 or more.
Married, filing jointly
\$0 to \$89,250.
\$89,251 to \$553,850.
\$553,851 or more.
Married, filing separately
\$0 to \$44,625.
\$44,626 to \$276,900.
\$276,901 or more.
\$0 to \$59,750.
\$59,751 to \$523,050.
\$523,051 or more.

Collectible assets and the net investment income tax

There are some exceptions to the standard capital gains tax rates. For example, long-term capital gains on "collectible assets" such as coins, precious metals, antiques, and fine art may be taxed at a maximum rate of 28%. Additionally, some investors may owe an additional 3.8% net investment income tax if their modified adjusted gross income exceeds certain thresholds.

How to avoid, reduce, or minimize capital gains taxes

There are several strategies that investors can use to minimize their capital gains tax liability. These include:
• Holding on to assets for more than one year to qualify for the lower long-term capital gains tax rates.
• Using tax-advantaged accounts such as 401(k) plans, individual retirement accounts, and 529 college savings accounts to avoid paying capital gains tax on investments.
• Rebalancing portfolios with dividends instead of selling assets to avoid capital gains tax.
• Excluding home sales of up to \$250,000 for single taxpayers or \$500,000 for married taxpayers if they have owned and used the home as their primary residence for at least two years.
• Using investment capital losses to offset gains.
• FAQs:

• What is the capital gains tax? The capital gains tax is a tax on the profit made from the sale of an asset, such as stocks, real estate, or artwork. The tax is based on the difference between the purchase price of the asset (known as the "basis") and the price at which it was sold.
• How are capital gains taxes calculated? Capital gains taxes are calculated by subtracting the cost basis (the price at which you acquired the asset) from the sale price, and then applying the appropriate tax rate based on the length of time you held the asset and your income level.
• What is the difference between long-term and short-term capital gains tax rates? Long-term capital gains tax rates are lower than short-term capital gains tax rates. Long-term capital gains apply to assets that have been held for more than one year, while short-term capital gains apply to assets that have been held for one year or less. The lower long-term capital gains tax rate is intended to incentivize long-term investment and discourage short-term speculation.
• Can I reduce or avoid capital gains taxes? There are several ways to reduce or avoid capital gains taxes, including holding on to the asset for more than a year, using tax-advantaged accounts like 401(k) plans and IRAs, and offsetting gains with losses. It's important to speak with a tax professional or financial advisor to determine the best strategy for your specific situation.
• What assets are subject to capital gains taxes? Most assets are subject to capital gains taxes, including stocks, bonds, real estate, and artwork. However, there are some exceptions and special rules for certain types of assets, such as collectibles, that may have different tax rates or rules.
• When do I have to pay capital gains taxes? Capital gains taxes are due in the year that the asset is sold. If you sell an asset in 2022, for example, you will need to report the capital gains on your 2022 tax return, which is due in April 2023.
• What is the net investment income tax? The net investment income tax is an additional 3.8% tax on investment income that applies to certain taxpayers. The tax applies to the lesser of your net investment income or the amount by which your modified adjusted gross income exceeds certain thresholds. The income thresholds for the net investment income tax are \$200,000 for single filers, \$250,000 for married couples filing jointly, and \$125,000 for married couples filing separately.
• Are there any exclusions from capital gains taxes? Yes, there are some exclusions from capital gains taxes, including the exclusion for the sale of a primary residence (up to \$250,000 for single filers and \$500,000 for married couples filing jointly) and the exclusion for qualified small business stock. There may also be special rules or rates for certain types of assets, such as collectibles or real estate held for a certain period of time.
• Article author
John Cruz
John is a PhD student with a passion to mathematics and education. In his freetime John likes to go hiking and bicycling.
Calculate How Much Capital Gains Tax You Will Owe With This Simple Calculator English
Published: Fri May 26 2023
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