How are capital gains taxes calculated?

Capital gains taxes are calculated based on the type and duration of the investment. The tax system distinguishes between short-term and long-term capital gains: Short-term gains come from assets held for one year or less and are taxed at ordinary income tax rates.

What is the tax rate on capital gains?

The rate goes up to 15 percent on capital gains if you make between $47,026 and $518,900. Above that income bracket, the rate jumps to 20 percent. These capital gains may also be subject to the net investment income tax (NIIT), an additional 3.8 percent tax, if your income is above certain levels.

How are long-term capital gains taxed?

The tax system distinguishes between short-term and long-term capital gains: Short-term gains come from assets held for one year or less and are taxed at ordinary income tax rates. Long-term gains come from assets held for more than one year and are taxed at a lower rate than regular income.