Know your tax bill before you sell — long-term vs short-term, NIIT included.
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If you hold an asset for more than one year before selling, the profit is taxed at long-term capital gains rates (0%, 15%, or 20%). Hold for one year or less, and you pay short-term rates — which are the same as ordinary income tax rates, up to 37%.
In 2024, single filers with taxable income under $47,025 pay 0% on long-term capital gains. Married filing jointly: under $94,050. This means if you're in a low income year, you can potentially realize gains completely tax-free.
The Net Investment Income Tax is an additional 3.8% tax on investment income (including capital gains) for high earners. It applies when your modified AGI exceeds $200,000 (single) or $250,000 (married). So the effective maximum long-term rate is 23.8%, not 20%.
No — this calculator covers federal taxes only. Most states also tax capital gains, often at ordinary income rates. States like Florida, Texas, Nevada, and Washington have no state income tax on capital gains.
When you inherit assets, your cost basis "steps up" to the fair market value at the time of death. This eliminates capital gains on the appreciation that occurred during the decedent's lifetime — a significant tax break for heirs.