The rate depends on how long you held, then how much you earn
Capital gains get two questions in order. First: holding period. Assets sold more than a year after purchase are long-term and land on the preferential schedule — 0%, 15% or 20% for 2026. Held a year or less, the gain is short-term and simply stacks on your ordinary income at normal bracket rates, which is why day-trading profits rarely feel like "investment" rates. Second: your income. The 0% rate applies while total taxable income stays under the 2026 thresholds — $49,450 single, $98,900 joint, $66,200 head of household; the 15% rate runs up to $545,500 single / $613,700 joint; everything above that sells at 20%.
The stacking rule people get wrong
The thresholds apply to your taxable income including the gain, not to the gain alone. A single filer with $40,000 of ordinary taxable income who realizes a $20,000 long-term gain does not pay 15% on all of it: the first $9,450 of gain fits under the $49,450 zero-rate ceiling and is taxed at 0%, while only the remaining $10,550 is taxed at 15%. Effective rate on the whole gain: about 7.9%. This layering is why realized gains in a low-income year — a sabbatical, early retirement, a business hiatus — can be essentially free, and why the calculator shows the split line by line rather than one blended number.
Losses first, then the rates
Capital losses net against gains before any rate applies — and the netting has an order: short-term losses first against short-term gains, long-term against long-term, then the two nets against each other. Up to $3,000 of net losses per year can offset ordinary income, with the remainder carrying forward indefinitely. A real example: $12,000 of long-term gains, $9,000 of harvested losses leaves a $3,000 net gain — if your income is under the zero ceiling, the entire net position is taxed at nothing. Loss harvesting only "wastes" losses when it strips you below the $3,000 ordinary-income offset while pushing you above a 0% ceiling in the same year.
Crypto follows the same law since 2026 reporting changes
Cryptocurrency is property, not a currency: every sale, swap or spend is a disposal, and the same 0/15/20% long-term schedule applies after a one-year hold. What changed for 2026 is visibility — brokers now report cost basis on the new 1099-DA, so the "nobody knows my basis" era is over and underreported crypto disposals will surface in matching. Tokens swapped directly for other tokens (ETH to SOL) are still taxable disposals at market value, a rule that surprises more filers than any other in this area. The dedicated crypto calculator runs these same rates with token-specific worked examples.
The home sale exclusion and NIIT
Two adjustments complete the picture. Married couples selling a primary residence exclude up to $500,000 of gain ($250,000 single) if they lived in it two of the last five years — most home sales produce no taxable gain at all. And high earners add the 3.8% Net Investment Income Tax on the lesser of net investment income or the excess of income over $200,000 single / $250,000 joint; it stacks on top of the 15% or 20% capital gains rate, which is how top-bracket investors reach a real 23.8% on gains. Both are reflected in the calculator’s output when your numbers cross the thresholds.
Estimates for planning only — not tax, legal or accounting advice. Your actual return depends on facts this tool does not ask about. Figures are based on IRS Revenue Procedure 2025-32 (tax year 2026), verified October 2026.