Short-term vs. long-term
- Short-term: assets held one year or less. Gains are taxed as ordinary income at your regular bracket (10%–37%).
- Long-term: assets held more than one year. Gains are taxed at preferential rates of 0%, 15% or 20%.
Long-term capital gains rates for 2025
| Rate | Single | Married filing jointly | Head of household |
|---|---|---|---|
| 0% | Up to $48,350 | Up to $96,700 | Up to $64,750 |
| 15% | $48,350 – $533,400 | $96,700 – $600,050 | $64,750 – $566,700 |
| 20% | Over $533,400 | Over $600,050 | Over $566,700 |
Thresholds are adjusted for inflation each year and are slightly higher for 2026. Verify in the IRS release for your tax year. Qualified dividends use the same rates.
Net investment income tax
A 3.8% net investment income tax applies to the lesser of net investment income or the amount of modified AGI above $200,000 for single filers ($250,000 for joint filers). These thresholds are not indexed for inflation.
Selling your home
You may exclude up to $250,000 of gain ($500,000 for married couples filing jointly) from the sale of your main home if you owned it and lived in it for at least two of the five years before the sale. Gains above the exclusion are taxable. See IRS Publication 523.
Calculating gain and basis
Gain equals the sale price minus your basis — generally what you paid plus certain costs like improvements or commissions. Keeping basis records is crucial; see how long to keep records. Brokerage forms (1099-B) usually report basis for stocks purchased after 2011, but not for all assets.
Capital losses
Losses first offset gains. If losses exceed gains, you can deduct up to $3,000 ($1,500 if married filing separately) against other income per year and carry the rest forward. Beware of the wash sale rule, which disallows a loss if you buy substantially identical securities within 30 days before or after the sale.
How to report
Report sales on Form 8949 and summarize on Schedule D, which flows to Form 1040. Tax software imports many brokerage forms automatically.
Special cases
- Collectibles are taxed at a maximum 28% rate.
- Real estate depreciation recapture (unrecaptured Section 1250 gain) is taxed up to 25%.
- Cryptocurrency is treated as property; sales and exchanges are generally taxable events.
- Inherited assets generally get a basis step-up to the value at death.
State taxes
Most states tax capital gains as ordinary income; a few, like Washington, have special taxes on some gains. Nine states have no broad income tax — see which states.
Frequently asked questions
What is the long-term capital gains tax rate?
0%, 15% or 20% depending on taxable income and filing status, plus a possible 3.8% net investment income tax.
How long must I hold an asset for long-term treatment?
More than one year.
Do I owe tax when I sell my home?
Possibly not: up to $250,000 ($500,000 joint) of gain may be excluded if you meet the ownership and use tests.
Official sources
- IRS Topic 409: Capital gains and losses
- IRS Publication 550: Investment income and expenses
- IRS Publication 523: Selling your home
- IRS: Federal income tax rates and brackets
General information only — not tax, legal or financial advice. Tax figures change every year; verify the current numbers at IRS.gov or with a qualified professional. Read the full disclaimer.