Short-term vs long-term: the one-year line
Hold an asset one year or less and the gain is short-term, taxed as ordinary income at rates up to 37%. Hold it more than one year and it becomes long-term, taxed at 0%, 15%, or 20% depending on income. Example: an $8,000 gain with $85,000 of other taxable income (single) costs about $1,200 long-term (15%) versus $1,760 short-term (22% bracket) — a $560 reward for holding past the anniversary. Near the one-year mark, waiting a few extra days is often the highest-return decision available.
Gains stack on top of your income
Long-term rates aren't a flat lookup — the gain sits on top of your ordinary income and can straddle brackets. For 2026 (approximate figures), the 0% rate covers taxable income up to about $49,450 single / $98,900 married filing jointly, and 15% runs to roughly $545,500 / $613,700. A retiree with $30,000 of income and a $25,000 long-term gain pays 0% on the slice up to the threshold and 15% only on the remainder — which is the basis of "tax-gain harvesting" in low-income years.
What this estimate leaves out
State taxes (0% in some states, over 13% in California), the 3.8% net investment income tax above $200,000 single / $250,000 married MAGI, depreciation recapture on rental property, the collectibles rate (28%), and the home-sale exclusion of $250,000/$500,000 on a primary residence. Losses matter too: capital losses offset gains dollar-for-dollar, then up to $3,000 of ordinary income per year, with the rest carried forward — watch the wash-sale rule if you rebuy within 30 days.
How to use this calculator
Enter your purchase price (cost basis), the sale price, how long you held the asset, and your other taxable income and filing status. The calculator stacks the gain on top of your income the way the IRS does, applies short-term ordinary rates or the 0/15/20% long-term brackets accordingly, and reports the tax, the effective rate on the gain, and your after-tax profit. Its best use is scenario comparison: run a sale as short-term versus long-term to see the reward for crossing the one-year mark, or model harvesting gains in a low-income year to capture the 0% bracket. Remember it's a federal estimate — add your state's rate, and watch for the 3.8% net investment income tax at higher incomes and the wash-sale rule when realizing losses.