Capital Gains Taxes

How Long Will It Take to Pay My Balance?

The tax consequences may be the most important part of your decision. Short-term gains are taxed at your highest marginal federal income tax rate, while long-term gains are taxed at lower long-term capital gains rates.

Knowing when to sell an asset is a difficult part of investing. Reasons for selling a stock, bond, or other security may include:

  • Rebalancing a portfolio
  • Profit taking
  • Stopping further losses
  • A higher potential rate of return on an alternate investment
  • Cash needed for expenses

The tax consequences may be the most important part of your decision. Short-term gains are taxed at your highest marginal federal income tax rate, while long-term gains are taxed at lower long-term capital gains rates.

The calculator will estimate potential capital gains taxes. If you have owned the investment for 12 months or less, capital gains are considered short term. If you have owned the investment for more than 12 months, capital gains are considered long term.

According to the IRS, for securities traded on an established securities market, your holding period begins the day after the trade date you bought the securities and ends on the trade date you sold them.

 

Based on the information you provided, the tax rate that would apply to your potential gain is shown below. Remember that capital losses offset capital gains, and losses of up to $3,000 in excess of gains can be deducted from your ordinary federal income tax. Additional losses in excess of the $3,000 limit can typically be carried forward to future tax years.

Your Results

View the difference between long-term and short-term capital gains tax rates by federal income tax bracket

The current value of the investment: $0
Your cost basis: $0
Your federal marginal income tax bracket: 0%
Owned this investment for longer than 12 months? 0
Your short-term capital gains tax rate is: 0%
Your long-term capital gains tax rate is: 0%
The tax rate that applies to this investment is:   0%
Your capital gain is: $0
Your capital gains tax would be: $0

This calculator is designed to give a simplified answer regarding the federal taxes you may owe if you sell an investment. There are many factors to consider. State taxes are not included for simplicity. Before you take any specific action be sure to consult with your tax professional.

If you are in the 10% or 15% federal income tax brackets, your long-term capital gains tax rate is 0%. If you are in the 25%, 28%, 33%, or 35% bracket, your long-term capital gains rate is 15%. If you are in the 39.6% bracket, your long-term capital gains tax rate is 20%. Taxpayers with adjusted gross incomes above $250,000 (filing jointly) or $200,000 (filing individually) may be subject to an additional 3.8% Medicare tax on investment income as a result of the Patient Protection and Affordable Care Act.

Capital Gains Tax Rate