Calculate capital gains tax on investments, real estate, and other assets. Understand short-term vs long-term rates, and plan strategies to minimize your tax liability.
2024 Capital Gains Tax Rates
Long-Term Capital Gains (Assets held > 1 year)
| Filing Status | 0% Rate | 15% Rate | 20% Rate |
|---|---|---|---|
| Single | $0 - $47,025 | $47,026 - $518,900 | $518,901+ |
| Married Filing Jointly | $0 - $94,050 | $94,051 - $583,750 | $583,751+ |
| Head of Household | $0 - $63,000 | $63,001 - $551,350 | $551,351+ |
Short-Term Capital Gains (Assets held ≤ 1 year)
Taxed as ordinary income at your regular tax rates (10% - 37%)
Special Capital Gains Rules
- Collectibles: Maximum 28% tax rate (coins, art, antiques)
- Section 1202 Stock: Up to $10 million or 10x basis excluded
- Primary Residence: $250K/$500K exclusion available
- Net Investment Income Tax: Additional 3.8% for high earners
- Depreciation Recapture: Up to 25% on real estate depreciation
Capital Loss Rules
- Capital losses offset capital gains dollar-for-dollar
- Net capital losses offset up to $3,000 of ordinary income
- Excess losses carry forward indefinitely
- Wash sale rule: 30-day restriction on repurchasing identical securities
Tax Planning Strategies
- Hold for 1+ years: Qualify for lower long-term rates
- Tax-loss harvesting: Realize losses to offset gains
- Asset location: Hold growth investments in tax-advantaged accounts
- Charitable giving: Donate appreciated assets instead of cash
- Installment sales: Spread gains over multiple years
- Opportunity Zones: Defer and potentially reduce gains
Frequently Asked Questions
What's the difference between short-term and long-term capital gains?
Short-term capital gains apply to assets held one year or less and are taxed as ordinary income at rates up to 37%. Long-term capital gains apply to assets held over one year and are taxed at preferential rates of 0%, 15%, or 20% depending on your income level. For 2024, the 0% rate applies to taxable income up to $47,025 (single) or $94,050 (married filing jointly). The holding period is crucial - selling just one day early can significantly increase your tax burden.
How does the Net Investment Income Tax affect my capital gains?
The Net Investment Income Tax (NIIT) adds a 3.8% tax on investment income, including capital gains, for high-income taxpayers. It applies when your modified adjusted gross income exceeds $200,000 (single) or $250,000 (married filing jointly). NIIT applies to the lesser of your net investment income or the amount your income exceeds the threshold. This effectively makes the top long-term capital gains rate 23.8% (20% + 3.8%) for high earners. Planning around these thresholds can save significant taxes.
What strategies can help minimize capital gains taxes?
Key strategies include: (1) Hold assets over one year for long-term rates, (2) Harvest tax losses to offset gains, (3) Use tax-advantaged accounts for growth investments, (4) Donate appreciated assets to charity instead of cash, (5) Consider installment sales to spread gains over multiple years, (6) Utilize the primary residence exclusion ($250K/$500K), (7) Invest in Opportunity Zones for deferral and potential reduction, and (8) Time gains realization to optimize tax brackets. Coordinate with other income to avoid NIIT thresholds when possible.