Capital Gains Tax Calculator 2026

Long-term gains have their own thresholds, which are not the same numbers as the ordinary income brackets. This surprises people who assume there is one set of bands.

Understating your basis means overpaying tax, and basis is easy to understate because it accumulates over years.

For shares, basis includes purchase commissions and — critically — reinvested dividends. Every reinvested dividend was already taxed as income in the year received, so it adds to your basis. Investors who ignore this pay tax twice on the same money, and over a decade of reinvestment the error can be substantial.

For property, basis includes the purchase price, closing costs and capital improvements — a new roof, an extension, a replaced heating system. Routine repairs do not count. Keeping receipts for improvements over decades is tedious and is exactly what reduces the eventual bill.

Inherited assets receive a step-up in basis to market value at the date of death, which frequently eliminates decades of accumulated gain entirely. Gifted assets do not — the recipient inherits the giver's original basis, which is why gifting an appreciated asset transfers the tax liability along with it.

FIFO —

the default for shares — the oldest lots are treated as sold first, which often means the largest gains.

Specific identification —

you may instead nominate which lots to sell, allowing you to choose high-basis shares and reduce the gain. Must be done at the time of sale.

Wash sale rule —

a loss is disallowed if you buy a substantially identical security within 30 days before or after the sale. The loss is not lost — it is added to the basis of the replacement.

Capital losses offset capital gains, and the ordering is set by law rather than by choice. Short-term losses first offset short-term gains, long-term losses offset long-term gains, and any remainder crosses over.

If losses exceed gains, up to $3,000 of net loss can be deducted against ordinary income each year — a figure that has not been indexed for inflation since 1978 and is now worth a fraction of its original value in real terms.

Losses beyond that carry forward indefinitely. Someone who realised a large loss can offset gains for many years afterwards, which is a genuine asset even though it appears nowhere on a balance sheet.

Tax loss harvesting deliberately realises losses to offset gains, then reinvests in something similar but not substantially identical to stay outside the wash sale rule. Done well it defers tax; done carelessly it triggers the disallowance and achieves nothing.

Selling your home is the largest capital gains exemption most people ever use. Up to $250,000 of gain is excluded for a single filer and $500,000 for a married couple filing jointly.

The conditions are ownership and use: you must have owned the property and lived in it as your main residence for at least two of the five years before the sale. The two years need not be continuous, and the exclusion can generally be used once every two years.

Partial exclusions exist for sales forced by a change of employment, health, or certain unforeseen circumstances, prorated by the fraction of the two-year requirement met.

Gain above the exclusion is taxable at long-term rates. Depreciation claimed while the property was rented is recaptured separately and taxed at up to 25%, which catches out owners who let a property before selling it.