Capital Gains Tax: 2022-2023 Rates and Calculator
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The capital gains tax rates range from 0% to 20% for long-term gains and 10% to 37% for short-term gains.
Capital gains taxes only apply when you sell an investment or asset.
The difference between short- and long-term capital gains is how long you hold the asset. Assets held for more than a year are considered long-term.
The capital gains tax rate is 0%, 15% or 20% on most assets held for longer than a year. Capital gains taxes on assets held for a year or less correspond to ordinary income tax brackets: 10%, 12%, 22%, 24%, 32%, 35% or 37%.
What is the capital gains tax?
A capital gains tax is a tax that investors pay on the profit from the sale of an asset. How the capital gain is taxed depends on filing status, taxable income and how long the asset was owned before selling.
Capital gains taxes apply to what are called capital assets. This can include investments such as stocks, bonds, cryptocurrency, real estate, cars, boats and other tangible items.
How capital gains taxes work
The holding period — the time between the purchase of the asset and its sale — helps to determine how the profit gets classified for tax purposes. Profits made on assets held for a year or less before sale are considered short-term capital gains, while profits made on assets held for longer than a year are long-term capital gains.
Only assets that have been "realized," or sold for profit, are subject to capital gains tax. This means that you won't incur taxes on any unsold, or "unrealized," investments that are, say, sitting in a brokerage account untouched. This is a good thing for long-term investors, as it allows an asset to grow in value over time without being taxed until the point of sale. Capital gains taxes are also progressive, similar to income taxes.
» Selling a home? Taxes on the sale of a home can work differently.
What is long-term capital gains tax?
Long-term capital gains taxes are a tax on profits from the sale of an asset held for more than a year. The long-term capital gains tax rate is 0%, 15% or 20%, depending on your taxable income and filing status. Long-term capital gains tax rates are generally lower than short-term capital gains tax rates.
What is short-term capital gains tax?
Short-term capital gains taxes are a tax on profits from the sale of an asset held for one year or less. The short-term capital gains tax rate equals your ordinary income tax rate, or your tax bracket. If you need a refresher on what tax bracket you’re in, review this rundown on federal tax brackets.
» Ready to crunch the numbers? Our capital gains tax calculator can help you estimate your gains.
Capital gains tax rates for 2022
The 2022 capital gains tax rates apply to assets sold for a profit in 2022. Capital gains are reported on Schedule D, which should be submitted with your federal tax return (Form 1040) by April 18, 2023, or by Oct. 16, 2023, with an extension.
Tax-filing status | 0% tax rate | 15% tax rate | 20% tax rate |
|---|---|---|---|
Single | $0 to $41,675. | $41,676 to $459,750. | $459,751 or more. |
Married, filing jointly | $0 to $83,350. | $83,351 to $517,200. | $517,201 or more. |
Married, filing separately | $0 to $41,675. | $41,676 to $258,600. | $258,601 or more. |
Head of household | $0 to $55,800. | $55,801 to $488,500. | $488,501 or more. |
Short-term capital gains are taxed as ordinary income according to federal income tax brackets. | |||
2022 capital gains tax calculator
» Looking for a way to defer capital gains taxes? Putting money in an IRA or a 401(k) could help postpone or even avoid future capital gains tax bills.
Capital gains tax rates for 2023
The 2023 capital gains tax rates apply to assets sold for a profit in 2023. Capital gains are reported on Schedule D, which should be submitted with your federal tax return (Form 1040) in April 2024, or October 2024, with an extension.
Tax-filing status | 0% tax rate | 15% tax rate | 20% tax rate |
|---|---|---|---|
Single | $0 to $44,625. | $44,626 to $492,300. | $492,301 or more. |
Married, filing jointly | $0 to $89,250. | $89,251 to $553,850. | $553,851 or more. |
Married, filing separately | $0 to $44,625. | $44,626 to $276,900. | $276,901 or more. |
Head of household | $0 to $59,750. | $59,751 to $523,050. | $523,051 or more. |
Short-term capital gains are taxed as ordinary income according to federal income tax brackets. | |||
Capital gains tax rules and considerations
Here are some other notable rules and exceptions that come into play.
1. Collectible assets. The capital gains tax rates in the tables above apply to most assets, but there are some noteworthy exceptions. Long-term capital gains on so-called “collectible assets” can be taxed at a maximum of 28%; these are things such as coins, precious metals, antiques and fine art. Short-term gains on such assets are taxed at the ordinary income tax rate.
2. The net investment income tax. Some investors may owe an additional 3.8% that applies to whichever is smaller: Your net investment income or the amount by which your modified adjusted gross income exceeds the amounts listed below.
The income thresholds that might make investors subject to this additional tax are:
Single or head of household: $200,000.
Married, filing jointly: $250,000.
Married, filing separately: $125,000.
Qualifying widow(er) with dependent child: $250,000.
» Having trouble deciding whether and when to sell? A qualified financial advisor can help you understand your options.
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How to avoid, reduce or minimize capital gains taxes
1. Hold on
Whenever possible, hold an asset for a year or longer so you can qualify for the long-term capital gains tax rate, since it's significantly lower than the short-term capital gains rate for most assets. Our capital gains tax calculator shows how much that could save.
2. Use tax-advantaged accounts
These include 401(k) plans, individual retirement accounts and 529 college savings accounts, in which the investments grow tax-free or tax-deferred. That means you don’t have to pay capital gains tax if you sell investments within these accounts. Roth IRAs and 529 accounts in particular have big tax advantages. Qualified distributions from those are tax-free; in other words, you don’t pay any taxes on investment earnings. With traditional IRAs and 401(k)s, you’ll pay taxes when you take distributions from the accounts in retirement.
» Learn more here about taxes on your retirement accounts.
3. Rebalance with dividends
Rather than reinvest dividends in the investment that paid them, rebalance by putting that money into your underperforming investments. Typically, you'd rebalance by selling securities that are doing well and putting that money into those that are underperforming. But using dividends to invest in underperforming assets will allow you avoid selling strong performers — and thus avoid capital gains that would come from that sale.
» Traded cryptocurrency last year? Other rules for crypto taxes
» Learn more about the dividend tax rate and how it works.
4. Exclude home sales
To qualify, you must have owned your home and used it as your main residence for at least two years in the five-year period before you sell it. You also must not have excluded another home from capital gains in the two-year period before the home sale. If you meet those rules, you can exclude up to $250,000 in gains from a home sale if you’re single and up to $500,000 if you’re married filing jointly.
» Learn more here about how capital gains on home sales work.
5. Carry losses over
You can use investment capital losses to offset gains. For example, if you sold a stock for a $10,000 profit this year and sold another at a $4,000 loss, you’ll be taxed on capital gains of $6,000. If your net capital loss exceeds your net capital gains, you can offset your ordinary income by up to $3,000 ($1,500 for those married filing separately). Any additional losses can be carried forward to future years to offset capital gains or up to $3,000 of ordinary income per year.
6. Consider a robo-advisor
Robo-advisors manage your investments for you automatically, and they often employ smart tax strategies, including tax-loss harvesting, which involves selling losing investments to offset the gains from winners.
