Capital Gains Tax Calculator
Estimate tax owed on an investment gain, based on how long you held it.
Your Details
How It Works
- Enter your purchase price and sale price.
- Enter how long you held the investment.
- Press Calculate — 12+ months qualifies for long-term rates.
Formula Used
Good to Know
- • Long-term gains (held 12+ months) get preferential rates.
- • Short-term gains are taxed like ordinary income.
Important Notes
- • Rates shown are simplified approximations by income tier.
- • Doesn't account for losses offsetting gains or the net investment income tax.
Why the 12-Month Line Matters So Much
Holding an investment for at least a year before selling is one of the most impactful timing decisions in personal finance — long-term capital gains rates are typically far lower than short-term rates, which are taxed as ordinary income. Selling just a few weeks early can push a gain from a preferential rate into a much higher ordinary-income rate.
Offsetting Gains With Losses
This calculator estimates tax on a single gain in isolation. In practice, capital losses from other investments can offset gains, reducing the taxable amount — a strategy sometimes called tax-loss harvesting. If you have both gains and losses in a given year, the net figure across all of them is what typically matters for tax purposes, not any single transaction alone.
Words You'll Run Into
- Short-term gain — profit on an asset held one year or less, taxed as ordinary income.
- Long-term gain — profit on an asset held over one year, taxed at typically lower preferential rates.
Here's How It Works: The 12-Month Threshold's Real Cost
A $6,000 gain, comparing selling at 11 months vs. 13 months (middle income tier):
Long-term (13 mo, preferential rate ~15%): tax ≈ $900
Waiting just 2 extra months to cross the 12-month threshold saves roughly $420 in tax on this single gain — a concrete illustration of why holding period timing matters for investment sales.
Holding Period Comparison Table
$6,000 gain, middle income tier:
| Held | Tax Owed |
|---|---|
| 6 months (short-term) | $1,320 |
| 13 months (long-term) | $900 |
Slip-Ups to Watch For With Capital Gains
- Selling just before the 1-year mark — a small wait can mean a significantly lower tax rate.
- Not offsetting gains with losses — tax-loss harvesting can reduce the net taxable gain.