Capital Gains Tax Calculator

Capital Gains Tax Calculator 2026

Model your full 2026 capital gains exposure across every IRS layer. Enter your ordinary income, short-term and long-term positions to see the exact Schedule D netting sequence, progressive bracket stacking, NIIT surtax, and your tax-loss harvesting ROI.

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How the IRS taxes capital gains in 2026

The IRS separates capital gains into two categories based on how long you held the asset before selling. Short-term gains, from assets held one year or fewer, are taxed as ordinary income and flow directly onto your existing wages and business income, reaching as high as 37% in 2026. Long-term gains, from assets held longer than a year, receive preferential rates of 0%, 15%, or 20% depending on your total income position.

The real tax cost of selling short-term positions

Short-term capital gains are one of the most expensive tax events available to investors and traders. A single investor earning $120,000 in ordinary income who cashes out $150,000 in crypto or stock held under one year now has $270,000 in combined taxable income. The marginal rate on the upper portion of that $150,000 gain reaches 32% or 35% depending on exact bracket placement. The stacking is mechanical and the IRS gives no relief for the speed of the trade.

Income Layer 2026 Rate Applies Above
Ordinary Income (Single) 10% to 37% $0
0% LTCG Preferential Bracket 0% $0 floor
15% LTCG Preferential Bracket 15% $49,450
20% LTCG Preferential Bracket 20% $545,500

The single most effective move for active traders is to delay asset sales past the one-year holding mark wherever possible. A position held 366 days instead of 364 days shifts the entire gain from 22% or 24% ordinary rates down to 0% or 15% preferential rates. Nothing else has to change. You hold the position two days longer and the rate drops.

How the asymmetric cross-netting rules work on Schedule D

The IRS Schedule D netting process runs in two stages. First, all short-term transactions are combined to produce a single net short-term figure. Then all long-term transactions are combined separately. If both produce net gains, each is taxed under its applicable rate structure. If one category produces a net loss and the other a net gain, the IRS combines them before applying any rates.

The asymmetry benefits taxpayers in a specific way. A net short-term loss can cancel out a net long-term gain, and the surviving gain retains its long-term character for preferential rate treatment. If both categories end in a net loss, the aggregate is subject to the $3,000 annual deduction cap under IRC §1211(b). Losses beyond that cap carry forward to the following tax year.

The NIIT surtax and when it triggers

The 3.8% Net Investment Income Tax under IRC §1411 is a separate layer that activates once your Modified Adjusted Gross Income crosses $200,000 for single filers or $250,000 for married filing jointly. The surtax applies to the lesser of your total net recognized capital gains or the dollar overflow above the MAGI threshold. A high-income investor liquidating a large position can owe both the 20% LTCG rate and the full 3.8% NIIT simultaneously on the same dollars, producing an effective federal rate of 23.8% on the top tier of long-term gains.

Tax-loss harvesting, the wash-sale rule, and substituted basis

Tax-loss harvesting moves a tax event forward in time rather than erasing it. When you sell a losing position and put the proceeds into something genuinely different, the loss is allowed against this year's gains and your new holding starts its own cost basis at what you paid. You have banked the loss now and reset the clock on the replacement.

The wash-sale rule under IRC §1091 is where harvesting quietly goes wrong. If you buy back the same security, or one substantially identical to it, within 30 days before or after the sale, the IRS disallows the loss for the current year. The loss is not gone. It gets added to the cost basis of the replacement shares, and the original holding period carries over, so you recover the benefit when you later sell those shares in a clean transaction. The calculator's Wash-Sale Disallowed field models this directly by pulling the blocked loss out of this year's netting.

So harvesting is a timing tool, not a way to make tax disappear. The simulator above puts a number on the timing benefit by comparing your baseline exposure against your harvested position.

New to capital gains taxes? Read our Capital Gains Tax Guide for 2026 to understand short-term versus long-term gains, tax brackets, NIIT, tax-loss harvesting, wash-sale rules, Section 1256 contracts, QSBS, and collectibles.

Capital Gains Tax Questions (FAQ)
What is the difference between short-term and long-term capital gains?

Short-term capital gains apply to assets sold after holding them for 12 months or fewer. The IRS taxes these at the same graduated ordinary income rates as wages, which can reach 37% at higher income levels. Long-term capital gains apply to assets held more than 12 months. These qualify for preferential rates of 0%, 15%, or 20% depending on where your total taxable income falls relative to the 2026 IRS thresholds for your filing status.

How does progressive bracket stacking actually work for capital gains?

The IRS stacks each income layer on top of the previous one. Your ordinary income occupies the lowest portion of the income ladder. Short-term gains stack directly on top of that base and get taxed at the ordinary rates that apply to that higher range. Long-term gains then stack on top of the combined ordinary plus short-term floor. The preferential LTCG rate you pay is determined by where that combined floor sits relative to the 2026 LTCG bracket thresholds.

When does the 3.8% NIIT surtax apply to my capital gains?

The Net Investment Income Tax under IRC Section 1411 activates once your Modified Adjusted Gross Income exceeds $200,000 for single filers or $250,000 for married filing jointly. The 3.8% surtax applies to the lesser of your total net recognized capital gains or the dollar amount by which your MAGI exceeds the applicable threshold. It operates as a separate layer on top of your regular capital gains tax, not as a replacement for it.

How does tax-loss harvesting reduce what I owe?

Tax-loss harvesting means deliberately selling positions sitting at a loss to offset your realized gains for the year. Short-term losses first offset short-term gains. Long-term losses first offset long-term gains. If one category produces a net loss, it then crosses over to offset net gains in the other category. Every dollar of gain you eliminate through harvesting saves you the tax you would have owed on it, including any NIIT surtax on that portion.

What is the $3,000 capital loss deduction and the 2027 carryover?

If your total net capital losses exceed your total net capital gains for the year, you cannot claim the full loss immediately. The IRS allows you to deduct up to $3,000 of net capital losses against your ordinary income on your current year return. Any amount above that $3,000 cap carries forward to the following tax year as a 2027 capital loss carryover and can offset future gains or generate another $3,000 ordinary income deduction at that time.

Can short-term losses offset long-term gains and vice versa?

Yes. The IRS Schedule D cross-netting rules allow losses in one category to offset gains in the other once each category has been internally netted. If your net short-term position is a $10,000 loss and your net long-term position is a $30,000 gain, the short-term loss reduces your recognized long-term gain to $20,000. That remaining $20,000 retains its long-term character and qualifies for preferential LTCG rates.

Primary sources

Every rate, bracket, and threshold here traces back to current IRS guidance. The 2026 figures come from Revenue Procedure 2025-32. Check any number against the source documents below before you file.