Short-Term vs. Long-Term Capital Gains Rules
The IRS taxes capital gains based on how long you held the asset before selling:
- Short-Term Gains (Held ≤ 1 year): Taxed as ordinary income, matching your standard federal income tax brackets (10% to 37%).
- Long-Term Gains (Held > 1 year): Benefit from preferential rates of 0%, 15%, or 20% depending on taxable income.
Frequently Asked Questions
What is the Net Investment Income Tax (NIIT)?
Primary Legal Sources: Internal Revenue Service (IRS) Publication 15-T (Federal Income Tax Withholding Methods), IRS Form 1040 Statutory Instructions, and Social Security Administration (SSA) OASDI Wage Base limit guidelines.
Calculation Methodology: Applies projected IRS standard deductions ($15,000 for Single, $30,000 for Married Filing Jointly) followed by progressive marginal brackets (10%, 12%, 22%, 24%, 32%, 35%, 37%) and statutory FICA rates (6.2% OASDI up to the cap + 1.45% Medicare, plus 0.9% high-income surtax).
Disclaimer: This calculator is provided for financial estimation and informational purposes only. It does not constitute formal legal, accounting, or professional tax advice. For personalized tax filings or complex deduction strategies, consult a licensed Certified Public Accountant (CPA) or tax attorney.