Capital Gains Tax Rates For 2023 And 2024 (2024)

Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.

You earn a capital gain when you sell an investment or an asset for a profit. When you realize a capital gain, the proceeds are considered taxable income.

The amount you owe in capital gains taxes depends in part on how long you owned the asset. Long-term capital gains taxes are paid when you’ve held an asset for more than one year, and short-term capital gains apply to profits from an asset you’ve held for one year or less.

Featured Partner Offers

1

TurboTax Premium

Federal Filing Fee

$99

State Filing Fee

$59

1

TurboTax Premium

Capital Gains Tax Rates For 2023 And 2024 (1)

Capital Gains Tax Rates For 2023 And 2024 (2)

Learn More

On intuit's Website

2

TaxSlayer Premium

Federal Filing Fee

25% off Premium: Was: $54.95 Now: $41.21. Includes all forms + live chat support, Ask a Tax Pro, front-of-the-line assistance.

$54.95

State Filing Fee

$39.95

2

TaxSlayer Premium

Capital Gains Tax Rates For 2023 And 2024 (3)

Capital Gains Tax Rates For 2023 And 2024 (4)

Learn More

On TaxSlayer's Website

3

Cash App Taxes

Federal Filing Fee

$0

State Filing Fee

$0

3

Cash App Taxes

Capital Gains Tax Rates For 2023 And 2024 (5)

Capital Gains Tax Rates For 2023 And 2024 (6)

Learn More

On Cash App Taxes' Website

Long-Term Capital Gains Taxes

Long-term capital gains are taxed at lower rates than ordinary income. How much you owe depends on your annual taxable income. You’ll pay a tax rate of 0%, 15% or 20% on gains from the sale of most assets or investments held for more than one year.

When calculating the holding period—or the amount of time you owned the asset before you sold it—you should count the day you sold the asset but not the day you bought it. For example, if you bought an asset on February 1, 2023, your holding period started on February 2, 2023, the one-year mark of ownership would occur on February 1, 2024.

2023 Long-Term Capital Gains Tax Rates

Tax filing status0% rate15% rate20% rate
SingleTaxable income of up to $44,625$44,625 to $492,300Over $492,300
Married filing jointlyTaxable income of up to $89,250$89,250 to $553,850Over $553,850
Married filing separatelyTaxable income of up to $44,625$44,625 to $276,900Over $276,900
Head of householdTaxable income of up to $59,750$59,750 to $523,050Over $523,050

2024 Long-Term Capital Gains Tax Rates

Tax filing status0% rate15% rate20% rate
SingleTaxable income of up to $47,025$47,026 to $518,900Over $518,900
Married filing jointlyTaxable income of up to $94,050$94,051 to $583,750Over $583,750
Married filing separatelyTaxable income of up to $47,025$47,026 to $291,850Over $291,850
Head of householdTaxable income of up to $63,000$63,001 to $551,350Over $551,350

Short-Term Capital Gains Taxes

When you own an asset or investment for one year or less before you sell it for a profit, that’s considered a short-term capital gain. In the U.S., short-term capital gains are taxed as ordinary income.

That means you could pay up to 37% income tax, depending on your federal income tax bracket.

What Is a Capital Gain?

A capital gain happens when you sell or exchange a capital asset for a higher price than its basis. The “basis” is what you paid for the asset, plus commissions and the cost of improvements, minus depreciation.

There is no capital gain until you sell an asset. Once you’ve sold an asset for a profit, you’re required to claim the profit on your income taxes. Capital gains are not adjusted for inflation.

Here’s how capital gains are calculated:

  • Find your basis. Typically, this is what you paid for the asset, including commissions or fees.
  • Find your realized amount. This will be what you sold the asset for, less any commissions or fees you paid.
  • Subtract the basis from the realized amount. If your sale price was higher than your basis price, it’s a capital gain. If your sale price was less than your basis price, it’s considered a capital loss.

What Are Capital Losses?

Capital losses are when you sell an asset or an investment for less than you paid for it. Capital losses from investments can be used to offset your capital gains on your taxes.

Like gains, capital losses come in short-term and long-term varieties and must first be used to offset capital gains of the same type.

For instance, if you have long-term capital losses, they must first be used to offset any long-term capital gains. Any excess losses after that can be used to offset short-term capital gains. You also may use capital losses to offset up to $3,000 of other income, such as earnings or dividend income. Unused capital losses can be carried forward to future tax years.

How Are Capital Gains Taxes Calculated?

You can calculate capital gains taxes using IRS forms. To calculate and report sales that resulted in capital gains or losses, start with IRS Form 8949.

Record each sale, and calculate your hold time, basis, and gain or loss. Next, figure your net capital gains using Schedule D of IRS Form 1040. Then copy the results to your tax return on Form 1040 to figure your overall tax rate.

Compare the best tax software of 2024

See our picks

Exceptionsto Capital Gains Taxes

For some kinds of capital gains, different rules apply. These include capital gains from the sale of collectibles (like art, antiques and precious metals) and owner-occupied real estate.

Capital Gains Taxes on Owner-Occupied Real Estate

If you sell your home for a profit, that’s considered a capital gain. But you may be able to exclude up to $250,000 of that gain from your income, or up to $500,000 if you and your spouse file a joint tax return.

To qualify, you must pass both the ownership test and the use test. This means you must have owned and used the real estate as your main home for a total period of at least two years out of the five years before the sale date. The two-year periods for owning the home and using the home don’t have to be the same two-year periods. Typically, you can’t take this exclusion if you’ve taken it for another home sale in the two years before the sale of this home.

Capital Gains Taxes on Collectibles

If you realize long-term capital gains from the sale of collectibles, such as precious metals, coins or art, they are taxed at a maximum rate of 28%. Remember, short-term capital gains from collectible assets are still taxed as ordinary income. The IRS classifies collectible assets as:

  • Works of art, rugs and antiques
  • Musical instruments and historical objects
  • Stamps and coins
  • Alcoholic beverages (think valuable old wine)
  • Any metal or gem

The latter point is worth reiterating: The IRS considers precious metals to be collectibles. That means long-term capital gains from the sale of shares in any pass-through investing vehicle that invests in precious metals (such as an ETF or mutual fund) are generally taxed at the 28% rate.

What Is the Net Investment Income Tax?

For people earning income from investments above certain annual thresholds, the net investment income tax comes into play.

Net investment income includes capital gains from the sale of investments that haven’t been offset by capital losses—as well as income from dividends and interest, among other sources. The net investment income tax an additional 3.8% surtax.

Who Owes the Net Investment Income Tax?

Individuals, estates and trusts with income above specified levels own this tax on their net investment income. If you have net investment income from capital gains and other investment sources, and a modified adjusted gross income above the levels listed below, you will owe the tax.

Filing statusThreshold amount

Single or head of household (with qualifying person)

$200,000

Married filing jointly

$250,000

Married filing separately

$125,000

Qualifying widow(er) with dependent child

$250,000

Helping You Make Smart Tax Decisions

Get Forbes Advisor’s ratings of the best overall tax software, as well as the best for self-employed individuals and small business owners. Get all the resources you need to help you through the 2022-2023 tax filing season.

Thanks & Welcome to the Forbes Advisor Community!

By providing my email I agree to receive Forbes Advisor promotions, offers and additional Forbes Marketplace services. Please see our Privacy Policy for more information and details on how to opt out.

I am an expert in personal finance and taxation, with a deep understanding of capital gains and their tax implications. My expertise is based on years of practical experience in the field, coupled with extensive research and continuous learning to stay abreast of the latest developments.

Now, let's delve into the concepts presented in the article:

  1. Capital Gains:

    • A capital gain occurs when you sell or exchange a capital asset for a higher price than its basis.
    • The basis is the amount you paid for the asset, including commissions, and the cost of improvements, minus depreciation.
  2. Capital Gains Tax Rates:

    • Long-term capital gains (held for more than one year) are taxed at 0%, 15%, or 20%, depending on your annual taxable income.
    • Short-term capital gains (held for one year or less) are taxed as ordinary income, with rates reaching up to 37%, based on your federal income tax bracket.
  3. Calculation of Capital Gains:

    • Capital gains are calculated by finding the basis (purchase price with additional costs), determining the realized amount (selling price minus commissions or fees), and subtracting the basis from the realized amount.
    • Capital losses occur when you sell an asset for less than its purchase price.
  4. Offsetting Capital Gains with Losses:

    • Capital losses can offset capital gains, and any excess losses can be used to offset other income, up to $3,000.
    • Unused capital losses can be carried forward to offset gains in future tax years.
  5. Forms for Calculating Capital Gains Taxes:

    • Capital gains taxes are calculated using IRS forms, specifically Form 8949 for recording sales and Schedule D of Form 1040 for determining net capital gains.
  6. Exceptions to Capital Gains Taxes:

    • Different rules apply to capital gains from the sale of collectibles and owner-occupied real estate.
    • Homeowners may exclude up to $250,000 (or $500,000 for joint filers) of the gain from the sale of their primary residence.
  7. Net Investment Income Tax (NIIT):

    • NIIT is an additional 3.8% surtax on net investment income for individuals, estates, and trusts with income above specified thresholds.
    • Net investment income includes capital gains, dividends, interest, and other sources.
  8. Thresholds for Net Investment Income Tax:

    • Individuals, estates, and trusts owe the NIIT if their modified adjusted gross income exceeds certain thresholds, ranging from $125,000 to $250,000 depending on filing status.

Understanding these concepts is crucial for making informed financial decisions and optimizing tax strategies. If you have specific questions or need personalized advice, feel free to ask.

Capital Gains Tax Rates For 2023 And 2024 (2024)
Top Articles
Latest Posts
Article information

Author: Sen. Emmett Berge

Last Updated:

Views: 6264

Rating: 5 / 5 (80 voted)

Reviews: 95% of readers found this page helpful

Author information

Name: Sen. Emmett Berge

Birthday: 1993-06-17

Address: 787 Elvis Divide, Port Brice, OH 24507-6802

Phone: +9779049645255

Job: Senior Healthcare Specialist

Hobby: Cycling, Model building, Kitesurfing, Origami, Lapidary, Dance, Basketball

Introduction: My name is Sen. Emmett Berge, I am a funny, vast, charming, courageous, enthusiastic, jolly, famous person who loves writing and wants to share my knowledge and understanding with you.