How Much Tax Do You Owe on Investment Gains?
Calculate capital gains tax on stocks, real estate, and other investments. Short-term vs long-term rates for 2026.
Short-Term vs Long-Term Capital Gains
Assets held less than 1 year are taxed as ordinary income (10-37%). Assets held 1 year or more get preferential long-term rates: 0%, 15%, or 20% depending on income. The difference can be enormous — a $50,000 gain taxed at 22% (short-term) costs $11,000, while the same gain at 15% (long-term) costs only $7,500.
Primary Residence Exclusion
If you sell your primary residence that you have lived in for 2 of the last 5 years, you can exclude up to $250,000 in gains ($500,000 for married couples). This is one of the most generous tax breaks in the code. It applies regardless of age and can be used repeatedly (every 2 years).
The 3.8% NIIT Surtax
High earners pay an additional 3.8% Net Investment Income Tax on capital gains when their MAGI exceeds $200,000 (single) or $250,000 (MFJ). This effectively creates a top long-term capital gains rate of 23.8% for high earners.
The "stepped-up basis" at death is one of the largest tax benefits in the code. An asset purchased for $50,000 that is worth $500,000 at death passes to heirs with a $500,000 basis — the $450,000 gain is never taxed.
