Capital Gains Tax Calculator

Everything else you are taxed on this year, after your deductions and before this sale. It is taxable income rather than gross pay, and the difference matters more here than anywhere else in the model: the gain is laid on top of this figure, so entering a gross number puts the gain in a higher layer than it belongs in and overstates the tax. Enter nothing if the sale is your only taxable income.

What the sale actually brought in, after the commission or fee the broker took out of it. It is the gross figure on the sale and not the profit: the profit is worked out here by taking the cost basis off it. Enter nothing rather than a negative number if the sale brought in nothing at all.

Optional. A single flat percentage applied to the whole gain, and a stand-in rather than any state's rules. Leave it blank where there is no state tax on the gain, which is the case in several states. It is one rate because fifty schedules that move every year would go stale faster than this calculator is revised, and because states differ in kind and not only in rate: some exclude part of a long-term gain, some tax it as ordinary income, some add a surcharge above a threshold, and one charges an excise tax on the sale rather than an income tax on the gain.

Optional, and it exists because the surtax keys off a different figure from the rate layers. Leave it blank and the surtax is measured against your other taxable income, which is right when the two are the same. Fill it when your modified adjusted gross income before this sale is higher, which it usually is, because that figure comes before your deductions: the surtax can then apply even though the taxable income beneath the gain would not suggest it. It changes the surtax and nothing else.

What the asset cost you, adjusted. That is the purchase price plus the commission you paid to buy, plus any reinvested dividends that bought more of it, plus improvements on property, and less any depreciation taken or return of capital received. Getting this wrong is the commonest real error in a capital gains figure, and a broker is not obliged to have reported it at all for anything bought long enough ago. The calculator cannot tell which parcel of shares you sold, so if more than one lot exists the basis entered here has to be the one you identified at the time of the sale.

The status on the return. It selects the rate layers, the surtax threshold and the amount of a loss that can be set against ordinary income, and the four differ enough that the same sale can cost noticeably different amounts. A head of household has long-term bands of its own but shares the single filer's surtax threshold, which is the one place the tables do not move together.

How long you owned the asset before you disposed of it, in whole months. The test is MORE than twelve months, so twelve is short term and thirteen is long, which is why this counts months rather than years. The count runs from the day after you acquired the asset to the day you disposed of it, that day included.

The values across the top of the tax grid: your other taxable income before the sale, in steps of ten thousand either side of yours and never below nothing. Read a column to hold your income fixed and vary what the sale brought in. The middle entry is your own figure.

Machinery, and NOT an input. The same for the column axis: Excel substitutes into it while filling the grid, and the rest of the time it mirrors your other taxable income.

Machinery. Excel requires the formula being tabulated to sit in the tax grid's top-left corner, where it means nothing to a reader, so it is formatted away. It holds Total_Tax.

How much of a loss can be set against ordinary income this year: the whole loss if it is small, otherwise the annual limit, which is halved on a separate return. This limit has not changed since 1978 and is not adjusted for inflation. It is zero whenever the sale is a gain.

One row for each rate layer the gain actually reaches, with the rate, the dollars landing in that layer and the tax they attract. A long-term gain is measured against the long-term layers and a short-term one against the ordinary income layers, so the rates change with the holding period. Layers the gain never reaches are left out rather than shown as zero, and the rows below the last one used are blank.

The flat state rate you entered, applied to the whole gain. It is zero when the rate is left blank. No state's actual rules are modelled, so treat this as a placeholder you can set to whatever your own state works out to rather than as an answer.

What this sale would cost in total if the asset were held more than twelve months: the long-term layers, plus the surtax and the state figure, both of which are the same either way. Compare it with the short-term figure to see what the holding period is worth.

What this sale would cost in total if the asset were held twelve months or less, with the gain taxed as ordinary income. It is usually the larger of the two, but not always: in a narrow band of income the twelve percent ordinary layer sits below the fifteen percent long-term layer, and there a short-term gain is the cheaper one.

The federal tax, the surtax and the state figure added together. This is what the grid at the foot tabulates, and it is the number to compare against what the sale brought in.

The values down the left of the tax grid: what the sale brought in, in steps of five thousand either side of yours and never below nothing. Read a row to hold the sale price fixed and vary your other income. The middle entry is your own figure, and a small sale makes the floor repeat near the top of this axis, which is the grid running out of room rather than an error.

Machinery, and NOT an input. Excel substitutes each value from the row axis into this cell while it fills the grid; the rest of the time it mirrors the sale proceeds. Change the sale proceeds above, never this: the axis is derived from that input, so editing the mirror moves the axis while the grid walks and the grid comes out meaningless.

The body of the tax grid: the total tax on the sale, worked out again for every combination of the two axes. One hundred and twenty-one cells, each one the whole calculation run again. It is a component of the grid rather than a result on its own.

The net investment income tax on the gain: 3.8 percent of the smaller of the gain and the amount by which your modified adjusted gross income including the gain exceeds the threshold for your filing status. Because it takes the smaller of the two, a large gain on a modest income is only partly caught by it. The thresholds have not been adjusted for inflation since they were introduced, so more people meet them every year.

What the sale brought in less what the asset cost you. A negative figure is a loss, which this calculator answers rather than refuses: there is no tax on it, and what it can offset is reported below.

How many dollars of the gain fall in the zero percent long-term layer, which is the part of the gain that sits below the threshold once your other income has filled the stack beneath it. It is computed whether or not the sale qualifies as long term, so for a short-term sale it shows what the split would be if the asset were held past twelve months.

How many dollars of the gain fall in the fifteen percent long-term layer. Most gains for most households land wholly in this one, which is why a flat fifteen percent is the usual rule of thumb and why the rule of thumb is wrong exactly at the two edges.

What the sale brought in, less all the tax reported here. It is not the profit: the money you originally put in is part of the proceeds and was never taxable, so compare this with what the sale brought in rather than with the gain.

The total tax divided by the gain. It is almost always below the rate on the next dollar, because the first part of a long-term gain can land in a lower layer than the last part, and it is the honest answer to the question of what this sale cost you as a rate.

The federal income tax on this gain alone, worked out by laying the gain on top of your other taxable income and charging each layer it reaches at that layer's own rate. It does not include the net investment income tax, which is a separate charge reported beside it.

The rate a further dollar of gain would be charged at: the rate of the highest layer the gain already reaches, plus the surtax where it applies and plus your state rate. It is what to use when deciding whether to sell a little more this year or wait, and it is not the rate the sale as a whole was charged at.

Reads OK, or explains why the inputs are not valid or why the answer deserves a second look.

How many more whole months the asset would have to be held for the gain to be long term. Zero once it already is. Because the control moves in whole months and the test is more than twelve, a sale at twelve months reads one month rather than none.

How many dollars of the gain fall in the twenty percent long-term layer, the part above the upper threshold for your filing status. With the surtax on top, that part is charged at 23.8 percent.

How the gain is treated: long term when the asset was held more than twelve months, short term otherwise, and simply a loss when the sale brought in less than the basis. The treatment decides which set of rate layers the gain is walked through, and the two figures further down price the sale both ways so the difference can be seen.

The part of a loss that is left after this year's offset. It carries forward with no time limit and keeps its character, so it can offset gains in a later year before it is used against ordinary income again. This calculator prices one sale, so it does not net the loss against other gains you may have in the same year, which a return does first.