Capital Gains Tax Explained: Short-Term vs Long-Term Rates
How capital gains tax works on stocks, real estate, and crypto. 2026 rates, exemptions, and tax-loss harvesting basics.
Free calculators — instant results, no signup required.
Key Takeaways
- 1Held under 1 year = short-term gains taxed as ordinary income (up to 37%).
- 2Held 1+ year = long-term gains at 0%, 15%, or 20% depending on income.
- 3Primary home sale: $250K/$500K exclusion if you lived there 2 of 5 years.
- 4Tax-loss harvesting offsets gains with investment losses in the same year.
Every time you sell an investment for profit, the IRS wants a cut. Understanding capital gains tax helps you time sales, choose accounts, and keep more of your returns.
Estimate tax impact with our tax planning calculator.
Short-Term vs Long-Term
Sell within 12 months: gains taxed at your ordinary income rate (10–37%). Hold 12+ months: preferential long-term rates of 0%, 15%, or 20%.
On a $50,000 gain, the difference between short and long-term can be $10,000+ in tax.
Home Sale Exclusion
Sell your primary residence: exclude up to $250,000 gain (single) or $500,000 (married) if you lived there 2 of the last 5 years.
Investment property does not qualify — different rules apply.
Reduce Your Tax Bill
Hold investments 12+ months. Use tax-advantaged accounts (401k, Roth IRA). Harvest losses to offset gains. Understand federal brackets.
Continue Reading
Ready to run your own numbers?
Explore All Calculators