How to Calculate Your Capital Gains Tax in the U.S. (Simple Guide)

When you sell stocks, real estate, or other investments in the U.S., the profit you make may be subject to capital gains tax.

Understanding how much you might owe is crucial for managing your finances, but don't worry, it's easier than it sounds.

Here's a simple guide to help you calculate your capital gains tax with confidence.

1. What Is Capital Gains Tax?

Capital gains tax is the tax you pay on the profit made from selling an asset.

If you sell something for more than you paid for it, the difference is considered a capital gain and is typically taxable.

There are two main types of capital gains:

If you held the asset for one year or less before selling, your gains are taxed at ordinary income tax rates.

If you held the asset for more than one year, you benefit from lower tax rates, usually between 0% to 20%, depending on your income level.

Here's the basic formula:

Capital Gain = Selling Price - Purchase Price - Fees or Costs

Selling Price: How much you sold the asset for.
Purchase Price (Cost Basis): How much you originally paid for it, including fees.
Fees or Costs: Any broker fees or commissions

Example:

You bought shares for $5,000 and sold them later for $7,000.

Your capital gain is:

$7,000 - $5,000 = $2,000

You would potentially owe taxes on that $2,000.

Once you know your gain, the next step is to determine your tax rate.

Short-term gains are taxed according to your regular income tax bracket (10% to 37% in 2025).
Long-term gains have lower rates, usually 0%, 15%, or 20%, depending on your filing status and income.

👉 Tip: Most investors prefer long-term holdings because of the lower tax rates.

Losses: If you sold an asset for a loss, you might be able to use that loss to offset your gains and lower your tax bill.
Dividends: Qualified dividends are taxed separately, often at the same rates as long-term gains.
High-Income Surcharges: Some very high earners may also face an additional 3.8% Net Investment Income Tax (NIIT).

Instead of manually calculating your gains and tax estimates, you can use simple online tools.

Tax Enough helps you estimate your expected taxes easily, letting you focus on growing your investments, not paperwork.

With features like the Investment Journal to track your stock transactions, staying organized for tax season has never been simpler.

✅ Ready to simplify your tax calculations?