United States capital gains tax
How long you held the asset decides which schedule applies. A year or less is short term and pays ordinary rates. Longer than a year is long term and has bands of its own.
What you paid, adjusted for commissions and reinvested amounts.
One year or less is short term and pays ordinary rates.
Income for the same year, before the standard deduction.
Most states treat a gain as ordinary income.
Results
After the standard deduction, before the gain.
How the gain split across the long term bands
| Rate | Gain in band | Tax |
|---|---|---|
| 15% | $25,000.00 | $3,750.00 |
Assumptions
- A holding period of one year or less is short term. The gain is added to ordinary income and the extra federal tax is measured.
- A longer holding period is long term. The gain sits on top of ordinary taxable income, so the bands are read from where ordinary income ends.
- Ordinary income is income for the same year before the standard deduction. Any part of the deduction that ordinary income does not use shelters the gain first.
- The 3.8 percent net investment income tax is not applied, matching the note on the data record.
- State tax treats the gain as ordinary income, which is what most states do. States with their own gain rules are not modelled.
- Collectibles, section 1202 stock, section 1250 recapture and wash sales are out of scope. Those carry their own rates or restrictions.
- No credits are applied, and losses are not carried between years.
Sources
- Rev. Proc. 2025-32, capital gain rate thresholds for 2026, Internal Revenue Service, checked 30 August 2026
- Federal ordinary income brackets for 2026, Internal Revenue Service, checked 30 August 2026
- Standard deduction amounts for 2026, Internal Revenue Service, checked 30 August 2026
The 3.8 percent net investment income tax is separate and is not included here.
How this works
The holding period does most of the work here. Sell within a year and the gain is ordinary income: it goes on top of your salary and pays whatever bracket it lands in, up to the top federal rate. Hold past a year and the same gain moves to a separate schedule with three bands, and the top of that schedule is well below the top ordinary rate.
The long term bands are not measured on the gain alone. They are measured on taxable income with the gain stacked above ordinary income, so your salary decides where the gain starts. A gain that would sit entirely in the zero band for someone with no other income can sit entirely in the 15 percent band once a salary is underneath it. That is why changing the ordinary income field moves the answer even though the sale has not changed.
One detail catches people out. If ordinary income is smaller than the standard deduction, the unused part of the deduction covers the bottom of the gain before any band applies. The breakdown table shows what actually reached each band after that.
States mostly ignore the distinction and tax a gain as ordinary income. A handful do something else, and none of those special rules are modelled. Federal brackets and the deduction behind these figures are listed on the bracket page.