Long-Term Capital Gains Tax Calculator

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Frequently Asked Questions

What are long-term capital gains?

Long-term capital gains are profits from selling assets held for more than one year. They benefit from preferential tax rates: 0%, 15%, or 20%, which are significantly lower than ordinary income tax rates (10-37%).

What are the long-term capital gains tax rates for 2024?

For 2024, long-term capital gains rates are 0% for taxable income up to $47,025 (single) / $94,050 (MFJ), 15% for income up to $518,900 (single) / $583,750 (MFJ), and 20% for income above those thresholds.

How is the holding period determined for long-term?

The holding period begins the day after you acquire the asset. You must hold the asset for more than one year (365 days + 1 day). For gifts, the donor's holding period generally carries over. For inheritance, assets are automatically long-term.

What is the difference between 0%, 15%, and 20% rates?

These are the three long-term capital gains brackets. Your rate depends on your total taxable income including the gain. The 0% rate applies to lower-income taxpayers, 15% to middle-income, and 20% to high-income taxpayers.

What is the Net Investment Income Tax (NIIT)?

NIIT adds 3.8% to the top long-term rate for high earners (MAGI > $200,000 single, $250,000 joint). This means the effective top rate is 23.8% (20% + 3.8%). NIIT applies to the lesser of net investment income or MAGI over threshold.

How can I qualify for the 0% long-term rate?

Keep your total taxable income (including capital gains) below $47,025 (single) or $94,050 (MFJ) in 2024. This is achievable for retirees with modest income, or by timing sales during low-income years.

How do long-term gains interact with ordinary income?

Long-term gains are stacked on top of ordinary income. Your ordinary income fills the lower brackets first, and long-term gains sit on top at their preferential rates. This means your LTCG rate depends on the bracket your total income falls into.

What is the benefit of long-term over short-term?

Long-term rates are significantly lower. A high earner in the 37% bracket pays 37% on short-term gains but only 20% (or 23.8% with NIIT) on long-term gains. This can save thousands of dollars in taxes.

How are qualified dividends taxed?

Qualified dividends are taxed at the same preferential rates as long-term capital gains: 0%, 15%, or 20%. This makes dividend-paying stocks held long-term very tax-efficient compared to bonds or high-turnover strategies.

What is the Section 1202 exclusion for small business stock?

Section 1202 allows up to 100% exclusion of gain on qualified small business stock held for more than 5 years, up to the greater of $10 million or 10x basis. This can eliminate long-term capital gains tax entirely for qualifying investments.

What is the primary residence exclusion?

Homeowners can exclude up to $250,000 ($500,000 married joint) of gain on the sale of their primary residence if they owned and lived in it for 2 of the last 5 years. Gains above the exclusion are taxed at long-term capital gains rates.

What is a 1031 exchange?

A 1031 exchange allows real estate investors to defer all capital gains tax by reinvesting proceeds into like-kind replacement property. The deferred gain reduces the basis of the new property. This can defer taxes indefinitely through successive exchanges.

How are long-term gains on collectibles taxed?

Collectibles (art, antiques, coins, precious metals) are taxed at a maximum 28% rate for long-term gains, not the standard 0/15/20%. This higher rate applies regardless of income level. Short-term collectibles gains are taxed as ordinary income.

What is the step-up in basis at death?

When you inherit an asset, its cost basis is stepped up to its fair market value at the date of death. This means any appreciation during the original owner's lifetime is never subject to capital gains tax. This is a major estate planning benefit.

How do I report long-term capital gains?

Report each transaction on Form 8949 (Part II), then summarize totals on Schedule D. Transfer the net amount to Form 1040. Your tax software or preparer will handle the calculation of which rate applies based on your total income.

What is tax-loss harvesting for long-term gains?

Harvesting losses reduces long-term capital gains. Sell losing positions to offset gains from winners. If losses exceed gains, up to $3,000 offsets ordinary income. Long-term losses offset long-term gains first, then short-term gains.

How do state taxes affect long-term gains?

Most states tax long-term capital gains as ordinary income at the state's tax rate. A few states offer preferential rates or exclude certain gains. No-income-tax states (TX, FL, NV, etc.) do not tax capital gains at the state level.

What is the holding period for inherited assets?

Inherited assets are always considered long-term regardless of how long the heir holds them before sale. The holding period for the decedent does not matter. This allows immediate sale of inherited assets at long-term rates.

How are long-term gains on cryptocurrency taxed?

Crypto held for more than one year qualifies for long-term rates (0%, 15%, or 20%). Crypto-to-crypto trades reset the holding period. This makes long-term holding of cryptocurrency very tax-efficient.

What is the qualified opportunity zone benefit?

Investing capital gains into a Qualified Opportunity Fund can defer tax and potentially eliminate up to 15% of the gain if held for 7+ years. Gains on the QOF investment itself are tax-free if held for 10+ years.

How do long-term gains affect Social Security?

Long-term gains increase your combined income, potentially making more of your Social Security benefits taxable. Up to 85% of benefits can be taxed. Strategic timing of gains can manage the taxability of benefits.

How do long-term gains affect Medicare premiums?

Long-term gains increase MAGI, which determines Medicare Part B and D premiums (IRMAA). Higher MAGI means higher premiums. Managing gains can help keep MAGI below IRMAA thresholds.

What is the 3.8% surtax on investment income?

The 3.8% NIIT applies to the lesser of net investment income or MAGI over $200,000 (single) / $250,000 (joint). This surtax applies on top of the regular LTCG rate, making the effective top rate 23.8%.

How are long-term gains on mutual funds taxed?

Mutual fund shares held >1 year and sold generate long-term gains. Funds also distribute long-term capital gains to shareholders annually. Tax-efficient funds (index funds, ETFs) minimize distributions.

What is the wash sale rule for long-term?

The wash sale rule applies to both short-term and long-term transactions. It disallows losses when you buy substantially identical securities within 30 days. However, it does not apply to cryptocurrencies (as of 2024).

How do long-term gains affect college financial aid?

Long-term gains are counted as income on the FAFSA, potentially reducing aid eligibility. The FAFSA assesses parental income at 22-47% and student income at 50%. Timing gains strategically can minimize aid impact.

What is the tax rate for long-term gains on real estate?

Real estate held >1 year generates long-term gains taxed at 0%, 15%, or 20%. Depreciation recapture (for investment property) is taxed at a maximum 25%. The primary residence exclusion ($250K/$500K) can eliminate tax entirely.

How do long-term gains affect the QBI deduction?

Long-term gains increase taxable income, which may push you into the QBI deduction phaseout range. The deduction phases out at $191,950 (single) / $383,900 (MFJ) of taxable income (2024).

What is the strategy for minimizing long-term gains tax?

Harvest losses to offset gains, hold assets for more than one year, use tax-advantaged accounts, donate appreciated stock to charity, use 1031 exchanges for real estate, and time sales during low-income years to use the 0% bracket.

What is the long-term rate for trusts and estates?

Trusts pay long-term rates on accumulated gains: 0% up to $3,150, 15% up to $15,450, and 20% above that (2024). These compressed brackets make distributing gains to beneficiaries more tax-efficient.