Capital Gains Tax: 2023-2024 Tax Rates and Calculator
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Capital gains taxes are paid when you sell an asset, such as stocks or bonds, for profit.
Investments such as stocks, bonds, cryptocurrency, real estate, cars, boats and other tangible items are subject to capital gains taxes when they are sold.
A long-term capital gains tax is a tax on profits from the sale of an asset held for more than a year.
A short-term capital gains tax is a tax on profits from the sale of an asset held for a year or less.
If you're thinking of diving into investing or selling a capital asset, it's important to get acquainted with the term "capital gains tax" before you begin wheeling and dealing.
Profit you make from the sale of an investment, such as a stock, or from the sale of another capital asset, such as a car, is considered income in the eyes of the IRS, and how it gets taxed — and at what rate — depends on a few factors, including your income.
Need to skip ahead? Jump below to see:
What are capital gains?
The term "capital gain" refers to the profit made from the sale of a capital asset, such as stock, house, car or another type of investment.
What is capital gains tax?
A capital gains tax is a tax on the profit from the sale of an asset. How the capital gain is taxed depends on filing status, taxable income and how long the asset was owned before selling.
The capital gains tax rate is 0%, 15% or 20% on most assets held for longer than a year. Capital gains taxes on assets held for a year or less correspond to ordinary income tax brackets: 10%, 12%, 22%, 24%, 32%, 35% or 37%.
Capital gains taxes apply to the sale of capital assets for profit. This can include investments such as stocks, bonds, cryptocurrency, real estate, cars, boats and other tangible items.
How does capital gains tax work?
Capital gains taxes are progressive, similar to income taxes. When you sell an investment, that profit is considered taxable income. The holding period — the time between when you bought the asset and when you sold it — determines how the profit gets classified for tax purposes. Profits made on assets held for a year or less before sale are considered short-term capital gains. Profits made on assets held for longer than a year are long-term capital gains.
Short-term capital gains are taxed according to the relevant federal tax rate. Long-term capital gains are subject to 0%, 15% or 20%, depending on your taxable income. According to the IRS, most people pay no more than 15% on their long-term capital gains.
Only assets that have been "realized," or sold for profit, are subject to capital gains tax. This means that you won't incur taxes on any unsold, or "unrealized," investments that are, say, sitting in a brokerage account untouched.
» Selling a home? Taxes on the sale of a home can work differently.
What is long-term capital gains tax?
A long-term capital gains tax is a tax on profits from the sale of an asset held for more than a year. The long-term capital gains tax rate is 0%, 15% or 20%, depending on your taxable income and filing status. Long-term capital gains tax rates are generally lower than short-term capital gains tax rates.
What is short-term capital gains tax?
A short-term capital gains tax is a tax on profits from the sale of an asset held for one year or less. Short-term capital gains are added to income and taxed at your ordinary income tax rate, or your tax bracket. If you need a refresher on what tax bracket you’re in, review this rundown on federal tax brackets.
» Ready to crunch the numbers? Our capital gains tax calculator can help you estimate your gains.
Capital gains tax rates 2023
2023 capital gains tax rates apply to assets sold for a profit in 2023. Capital gains are reported on Schedule D, which is submitted with your federal tax return (Form 1040) by April 15, 2024, or October 2024, with an extension.
The table below provides an overview of the tax rates that apply to long-term gains based on taxable income.
Long-term capital gains tax rates (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. |
Head of household | $0 to $59,750. | $59,751 to $523,050. | $523,051 or more. |
Short-term capital gains are taxed as ordinary income according to federal income tax brackets. | |||
» Looking for a way to defer capital gains taxes? Putting money in an IRA or a 401(k) could help postpone or even avoid future capital gains tax bills.
2023 capital gains tax calculator
Use this capital gains calculator to estimate your taxes on assets sold in 2023.
Capital gains tax rates 2024
2024 capital gains tax rates apply to assets sold for a profit in 2024. Capital gains are reported on Schedule D, which will be due with your federal tax return (Form 1040) by the April 2025 tax filing deadline, or by October 2025 with an extension.
The table below provides an overview of the long-term capital gains tax rates based on taxable income.
Long-term capital gains tax rates (2024)
Tax-filing status | 0% tax rate | 15% tax rate | 20% tax rate |
|---|---|---|---|
Single | $0 to $47,025. | $47,026 to $518,900. | $518,901 or more. |
Married, filing jointly | $0 to $94,050. | $94,051 to $583,750. | $583,751 or more. |
Married, filing separately | $0 to $47,025. | $47,026 to $291,850. | $291,851 or more. |
Head of household | $0 to $63,000. | $63,001 to $551,350. | $551,351 or more. |
Short-term capital gains are taxed as ordinary income according to federal income tax brackets. | |||
Capital gains tax rules and considerations
Here are some other notable rules and exceptions that come into play.
Collectible assets
The capital gains tax rates in the tables above apply to most assets, but there are some noteworthy exceptions. Long-term capital gains on so-called “collectible assets” can be taxed at a maximum of 28%. This includes items such as coins, precious metals, antiques and fine art. Short-term gains on such assets are taxed at the ordinary income tax rate.
» Traded cryptocurrency last year? Other rules for crypto taxes
The net investment income tax
Some investors may owe an additional 3.8% of either your net investment income or the amount by which your modified adjusted gross income exceeds the amounts listed below — whichever is smaller.
The income thresholds that might make investors subject to the net investment income tax are:
Single or head of household: $200,000.
Married, filing jointly: $250,000.
Married, filing separately: $125,000.
Qualifying widow(er) with dependent child: $250,000.
» Having trouble deciding whether and when to sell? A qualified financial advisor can help you understand your options.
How to avoid, reduce or minimize capital gains taxes
1. Hold on
Whenever possible, hold an asset for a year or longer so you can qualify for the long-term capital gains tax rate, since it's significantly lower than the short-term capital gains rate for most assets. Our capital gains tax calculator shows how much that could save.
» Dive deeper: Read more about taxes on stocks, and how to pay less.
2. Use tax-advantaged accounts
These include 401(k) plans, individual retirement accounts and 529 college savings accounts, in which the investments grow tax-free or tax-deferred. That means you don’t have to pay capital gains tax if you sell investments within these accounts. Roth IRAs and 529 accounts in particular have big tax advantages. Qualified distributions from those are tax-free; in other words, you don’t pay any taxes on investment earnings. With traditional IRAs and 401(k)s, you’ll pay taxes when you take distributions from the accounts in retirement.
» Learn more: We break down taxes on your retirement accounts.
3. Rebalance with dividends
Rather than reinvest dividends in the investment that paid them, rebalance by putting that money into your underperforming investments. Typically, you'd rebalance by selling securities that are doing well and putting that money into those that are underperforming. But using dividends to invest in underperforming assets will allow you to avoid selling strong performers — and thus avoid capital gains that would come from that sale.
» Learn more about the dividend tax rate and how it works.
4. Exclude home sales
To qualify, you must have owned your home and used it as your main residence for at least two years in the five-year period before you sell it. You also must not have excluded another home from capital gains in the two-year period before the home sale. If you meet those rules, you can exclude up to $250,000 in gains from a home sale if you’re single and up to $500,000 if you’re married filing jointly.
» Learn more here about how capital gains on home sales work.
5. Carry losses over
The IRS taxes your net capital gain, which is simply your total capital gains (investments sold for a profit) minus your total capital losses (investments sold at a loss). This means that you can use investment capital losses to offset gains. For example, if you sold a stock for a $10,000 profit this year and sold another at a $4,000 loss, you’ll be taxed on capital gains of $6,000.
If your net capital loss exceeds your net capital gains, you can offset your ordinary income by up to $3,000 ($1,500 for those married filing separately). Any additional losses can be carried forward to future years to offset capital gains or up to $3,000 of ordinary income per year.
6. Consider a robo-advisor
Robo-advisors manage your investments for you automatically, and they often employ smart tax strategies, including tax-loss harvesting, which involves selling losing investments to offset the gains from winners. » Ready to get started? See our picks for best robo-advisors
