How is capital gains tax calculated?

Long-term capital gains (assets held >1 year) are taxed at preferential rates: 0%, 15%, or 20% depending on your total taxable income. Gains are stacked on top of ordinary income, so your ordinary income fills the lower brackets first. The net investment income tax (3.8%) may also apply above $200K/$250K. This calculator uses 2026 brackets.

What is the formula for capital gains tax?

The formula used is: LTCG Tax = stacked on top of ordinary income

How is this different from short-term capital gains?

Short-term gains (assets held 1 year or less) are taxed as ordinary income at your marginal tax rate — up to 37%. Long-term gains get the preferential 0%/15%/20% rates. Holding assets for at least 12 months before selling can dramatically reduce your tax bill.

What is the net investment income tax (NIIT)?

The NIIT is an additional 3.8% tax on investment income for single filers with modified AGI over $200,000 ($250,000 married filing jointly). It applies to the lesser of your net investment income or the excess above the threshold.

Can I avoid capital gains tax entirely?

Yes, if your total taxable income (including gains) stays within the 0% bracket. For a single filer in 2026, that means keeping taxable income under $47,025. Charitable donations of appreciated stock, tax-loss harvesting, and holding until death (step-up in basis) are also strategies to minimize or avoid LTCG tax.

Capital Gains Tax Calculator

Name: Capital Gains Tax Calculator
Author: TorchFI

Estimate LTCG tax owed · Updated 2026

How LTCG Tax Works

Long-term capital gains receive preferential tax treatment to encourage long-term investing. The 2026 brackets for single filers are: 0% up to $47,025 in taxable income, 15% from $47,026 to $518,900, and 20% above $518,900.

The key concept is stacking: your ordinary income fills the bottom of the brackets first, then capital gains stack on top. This means if you have $40,000 in ordinary income, the first $7,025 of gains is still tax-free. Strategic tax planning involves managing your ordinary income to maximize 0% LTCG space.

Author: TorchFI Team

Frequently Asked Questions

How is capital gains tax calculator calculated?

The formula is: LTCG Tax = stacked on top of ordinary income. Enter your values above and click Calculate to see your personalized result instantly. Long-term capital gains (assets held >1 year) are taxed at preferential rates: 0%, 15%, or 20% depending on your total taxable income. Gains are stacked on top of ordinary income, so your ordinary…

What inputs do I need for the capital gains tax calculator?

You need: Gain Amount, Other Income, Filing Status. Default values are pre-filled — adjust them to match your personal finances for a customized result.

Is the capital gains tax calculator free to use?

Yes — all TorchFI calculators are completely free. No registration, no email required. Calculations run entirely in your browser for maximum privacy. We never see or store your financial data.

How does the capital gains tax calculator help with FIRE planning?

Calculate your long-term capital gains tax using 2026 tax brackets. See how much you'll owe when selling investments held for more than one year. This calculator helps you make data-driven decisions about your financial independence journey instead of relying on guesswork.

Last reviewed: June 2026 · Data sources: Methodology & Formulas · Academic References · Correction Log · Editorial Policy