how much is capital gains on stocks — U.S. guide

How much is capital gains on stocks

Asking "how much is capital gains on stocks" means one thing for most U.S. investors: how much federal (and possibly state) tax you owe on the profit when you sell shares. This article explains that answer step‑by‑step, covering basic definitions, holding‑period rules (short‑term vs. long‑term), federal tax rates for recent tax years, the 3.8% Net Investment Income Tax (NIIT), state treatment, reporting rules, common exceptions, planning strategies, and worked examples.

As of January 15, 2026, according to Reuters and the Financial Times reporting on recent U.S. economic data, the labour market remained subdued with nonfarm payrolls up 50,000 and unemployment at roughly 4.4%—a macro backdrop investors sometimes cite when timing taxable sales. (Reporting date: January 15, 2026.)

Note: This guide is informational only and not tax advice. Tax rules change annually; always confirm rates and thresholds for the tax year in which you sell stock and consult a qualified tax professional for personalized guidance.

Basic concepts

Before answering "how much is capital gains on stocks" in dollars or percent, you need several foundational definitions.

• Realized vs. unrealized gains: A gain is unrealized while you still own the shares. It becomes realized when you sell (or otherwise dispose of) the shares for proceeds greater than your cost basis. Only realized gains are typically taxable.

• Cost basis: The amount you paid for the shares, generally the purchase price plus transaction fees (commissions, broker fees). For shares acquired through multiple purchases, each lot has its own basis unless you use an averaged or specific‑identification method allowed by your broker and the IRS.

• Proceeds: Gross sale amount received when the shares are sold, before fees and taxes.

• Adjusted basis: Cost basis adjusted for certain items: acquisition fees, reinvested dividends (e.g., DRIP additions increase basis), return‑of‑capital adjustments (which reduce basis), and certain corporate actions. Properly tracking adjustments is crucial to answering "how much is capital gains on stocks" accurately.

• Holding costs and fees: Brokerage commissions, transfer taxes (rare), and selling fees reduce net proceeds and affect the taxable gain calculation.

Holding period and classification

The single most important factor in answering "how much is capital gains on stocks" in the U.S. is the holding period.

• Short‑term capital gains: If you hold shares for one year or less (365 days or less from purchase to sale), the gain is short‑term and taxed at ordinary income tax rates (your marginal tax bracket). Short‑term gains do not receive the preferential long‑term rates.

• Long‑term capital gains: If you hold shares for more than one year (>365 days), the gain is long‑term and eligible for preferential federal tax rates, which are typically 0%, 15%, or 20% depending on your taxable income and filing status.

Why it matters: For the same dollar gain, a long‑term gain is often taxed at a substantially lower federal rate than a short‑term gain, so the holding period can materially change "how much is capital gains on stocks" for a given investor.

Federal tax rates for capital gains (U.S.)

Short‑term gains: taxed as ordinary income

• Short‑term capital gains are taxed at your marginal ordinary income tax rate. For recent years that has ranged from 10% up to 37% at the federal level for the highest brackets. That means a short‑term sale can push you into a higher bracket and change "how much is capital gains on stocks" you ultimately owe.

Long‑term gains: preferential tiers

• Long‑term capital gains (LTCG) are taxed at preferential federal rates—commonly 0%, 15%, or 20%—based on your taxable income and filing status for the tax year in which you sell. These thresholds are adjusted annually for inflation.

• Typical pattern (example range relevant to 2025–2026 filing years):

  • 0% LTCG rate for lower taxable incomes up to a threshold.
  • 15% LTCG rate for middle incomes between the 0% threshold and a higher threshold.
  • 20% LTCG rate for higher taxable incomes above that upper threshold.

• High‑income taxpayers may also face an extra surtax (see NIIT below) and could see combined rates above 20% when state taxes are included.

Rates change: The exact taxable‑income thresholds for 0%/15%/20% change each year. Popular tax resources (TurboTax, Bankrate, NerdWallet, Fidelity, H&R Block) publish the updated brackets annually. When you ask "how much is capital gains on stocks" you should confirm the bracket thresholds for the tax year you’re filing.

Net Investment Income Tax (NIIT) and surtaxes

The Net Investment Income Tax (NIIT) is a 3.8% surtax that can apply to certain investment income—including capital gains—above specified income thresholds.

• NIIT thresholds (typical): $200,000 single, $250,000 married filing jointly, and $125,000 married filing separately. These thresholds are statutory and may be indexed periodically.

• Effect on "how much is capital gains on stocks": If your modified adjusted gross income (MAGI) exceeds the NIIT threshold, a portion of your capital gains may be subject to an extra 3.8% tax on top of the federal long‑term capital gains rate or ordinary rate for short‑term gains.

• Example: A taxpayer in the 20% LTCG bracket who is subject to NIIT would pay 20% + 3.8% = 23.8% federal tax on the portion of gains subject to NIIT (before state taxes).

State and local taxes

State and local governments may tax capital gains as ordinary income or impose separate rules. State rates, brackets, and deductions vary widely.

• Some states tax capital gains at the same rates as ordinary income (progressive or flat state income tax).

• A few states impose no state income tax and therefore do not tax capital gains at the state level.

• Local jurisdictions (cities, counties) can have additional income taxes in a few cases.

Because state rules vary, the total answer to "how much is capital gains on stocks" for a U.S. investor must include state taxes when calculating after‑tax proceeds.

Practical step: To estimate total tax on a stock sale, add your federal capital gains tax (plus NIIT if applicable) to your state income tax on that gain.

Calculating capital gain or loss (step‑by‑step)

To determine "how much is capital gains on stocks" for a sale, follow these steps:

1. Determine the cost basis for the shares sold (include purchase price, commissions, and adjustments like reinvested dividends).
2. Determine the gross proceeds from the sale (sale price × shares sold).
3. Subtract transaction costs (selling commissions, fees) from proceeds if you want net proceeds for cash planning; the IRS usually expects you to report gross proceeds and basis but commissions reduce your gain when included in basis or selling costs.
4. Calculate gain or loss: Gain = proceeds − adjusted basis. If negative, you have a capital loss.
5. Determine holding period for each lot to classify as short‑term or long‑term.
6. Net gains and losses: Net all short‑term gains and losses together and all long‑term gains and losses together. If you have both, net short‑term and long‑term positions against each other per IRS rules to compute overall taxable capital gain or loss.
7. Apply the appropriate tax rates: ordinary rates for net short‑term gains; preferential rates for net long‑term gains; apply NIIT where applicable; apply state tax rules on net capital gain.

Wash sales and basis adjustments (see later) can change the basis used in step 1 and therefore the final answer to "how much is capital gains on stocks."

Reporting requirements and forms

When you sell stocks, brokers report sales to you and the IRS on Form 1099‑B. For tax filing, common IRS forms/schedules include:

• Form 1099‑B: Broker reporting of gross proceeds, cost basis (if broker has basis reporting to the IRS), and gain/loss information. Brokers will often provide multiple 1099‑B rows for different lots and different holding‑period classes.

• Form 8949: Used to report sales and other dispositions of capital assets. Adjustments to basis, wash‑sale disallowed losses, and incorrect basis reported by the broker are entered here.

• Schedule D (Form 1040): Summarizes totals from Form 8949 and calculates the overall capital gain or loss for the tax year.

• Form 8814/Other: If dividends were reinvested or if you have special reporting needs, other forms may be relevant.

Key point: Brokers sometimes report basis differently (broker‑reported basis vs. taxpayer‑reported basis). If you have AMT adjustments, disallowed losses, or wash‑sale basis adjustments, you may need to make corrections on Form 8949.

Special categories and exceptions

Qualified dividends vs. capital gains

• Qualified dividends receive preferential tax treatment similar to long‑term capital gains (0/15/20% tiers) if certain holding‑period tests are met. Nonqualified dividends are taxed as ordinary income.

• When estimating "how much is capital gains on stocks" remember that dividend income from the same company can be taxed differently depending on qualification.

Collectibles and special assets

• Certain assets—like collectibles (coins, art, antiques)—may be subject to a maximum long‑term capital gains rate higher than 20%, historically up to 28% at the federal level. These special rates influence the final answer for those asset classes.

• Other assets (real estate, small business stock, crypto) have their own special rules (see next section for crypto and international guidance).

Inherited and gifted stock

• Inherited assets typically receive a stepped‑up basis: the cost basis is adjusted to the market value on the decedent’s date of death (or alternate valuation date in certain estates). That reduces or eliminates capital gains tax on appreciation that occurred before inheritance.

• Gifted assets carry the donor’s basis (carryover basis) for the recipient, which affects taxable gain when the recipient later sells.

How that affects "how much is capital gains on stocks": Inherited stock often produces little or no capital gains tax on an immediate sale; gifted stock can produce larger taxable gains depending on donor basis.

Retirement and tax‑advantaged accounts

• Sales inside tax‑advantaged retirement accounts (traditional IRAs, Roth IRAs, 401(k) plans) do not generate immediate capital gains taxes. Tax treatment occurs upon distribution: traditional accounts are taxable as ordinary income when distributed; Roth distributions can be tax‑free if requirements are met.

• For taxable brokerage accounts the ordinary capital gains rules apply when you sell stock.

Limitations and anti‑avoidance rules

Wash‑sale rule

• The wash‑sale rule disallows a deduction for a loss if you (or your spouse or a controlled entity) buy substantially identical stock within 30 days before or after a loss sale. The disallowed loss is added to the basis of the newly purchased shares.

• For investors asking "how much is capital gains on stocks" after tax‑loss harvesting, wash‑sale rules can change the timing and size of deductible losses and therefore the taxable gain calculation.

Alternative Minimum Tax (AMT) interactions

• The AMT has historically applied to certain taxpayers and could indirectly affect after‑tax amounts. Most capital gains are included in AMT income calculations. While AMT has been less common for many taxpayers after recent tax changes, special circumstances can still create interactions.

Tax planning strategies to manage capital gains

When the question is "how much is capital gains on stocks" many investors look for ways to reduce the tax bill legally. Common strategies include:

• Hold for long term: Where feasible, hold shares for more than one year to qualify for preferential long‑term rates.

• Tax‑loss harvesting: Sell losing positions to realize losses that offset gains. Net capital losses can offset up to $3,000 of ordinary income per year for individuals and be carried forward.

• Asset location: Place tax‑inefficient assets (taxable bond funds, short‑term strategies) inside tax‑advantaged accounts and hold tax‑efficient assets (index funds, tax‑managed equities) in taxable accounts.

• Gifting appreciated stock: Donors can gift appreciated stock to family members in lower brackets (careful: kiddie tax rules and gift‑tax rules apply) or to charities to deduct fair market value if you itemize.

• Donate appreciated stock: Donating appreciated shares directly to a qualified charity typically allows a deduction for the fair market value while avoiding capital gains tax on the appreciation.

• Timing sales across years: Shift sales into a year with lower expected taxable income to take advantage of lower LTCG brackets or 0% rate where applicable.

• Use tax software or advisors: Tools and professionals help estimate "how much is capital gains on stocks" including NIIT exposure and state taxes.

Note: All planning should respect IRS anti‑avoidance rules and be consistent with your overall financial plan. This article does not provide individualized tax advice.

Examples and illustrative calculations

Below are simplified examples to illustrate how different rules affect "how much is capital gains on stocks." All dollar figures are hypothetical.

Example 1 — Short‑term sale (ordinary rates):

• Purchase: 100 shares at $50 = $5,000 basis.
• Sale within 6 months: 100 shares at $80 = $8,000 proceeds.
• Gain: $3,000 (short‑term).
• Assume taxpayer is in the 24% federal marginal bracket and lives in a state with 5% income tax.
• Federal tax on gain: $3,000 × 24% = $720.
• State tax: $3,000 × 5% = $150.
• NIIT: Not applicable if MAGI below threshold.
• Total tax: $870. After‑tax proceeds: $8,000 − $870 = $7,130.

Example 2 — Long‑term sale (preferential rates) without NIIT:

• Purchase: 100 shares at $50 = $5,000 basis.
• Sale after 2 years: 100 shares at $80 = $8,000 proceeds.
• Gain: $3,000 (long‑term).
• Assume taxpayer’s taxable income places them in 15% LTCG bracket and state tax 5%.
• Federal LTCG tax: $3,000 × 15% = $450.
• State tax: $3,000 × 5% = $150.
• Total tax: $600. After‑tax proceeds: $8,000 − $600 = $7,400.

Example 3 — High‑income taxpayer subject to NIIT:

• Same $3,000 long‑term gain.
• Assume taxpayer in 20% LTCG bracket and MAGI above NIIT threshold.
• Federal LTCG tax: $3,000 × 20% = $600.
• NIIT: $3,000 × 3.8% = $114 (if the gain is fully within the NIIT taxable portion).
• State tax: 5% = $150.
• Total tax: $864. After‑tax proceeds: $7,136.

These examples show how holding period, federal bracket, NIIT, and state taxes change the final answer to "how much is capital gains on stocks." Adjust numbers to your situation to estimate actual tax.

Practical points for traders and investors

• Frequent traders: Frequent trading commonly results in mostly short‑term gains taxed as ordinary income. If you trade professionally, different rules (mark‑to‑market election, trader tax status) may apply; consult a tax professional.

• Mutual funds and ETFs: Mutual funds and some ETFs may distribute capital gains to shareholders; those distributions can be taxable even if you didn’t sell shares. Know the fund’s year‑end distribution schedule when estimating "how much is capital gains on stocks."

• Cost‑basis reporting options: Brokers often let you choose default methods (FIFO, average cost, or specific identification when selling). Specific identification lets you select which lots to sell to optimize tax outcomes.

• Recordkeeping: Keep trade confirmations, dividend statements, and records of reinvested dividends and corporate actions. Good records reduce mistakes when reporting gains and answering "how much is capital gains on stocks."

• Use technology: Tax software, online calculators (SmartAsset-style calculators), and broker cost‑basis reports help estimate tax liabilities before you sell.

• Use Bitget for execution: For investors using an exchange for securities or tokenized stocks, consider Bitget for order execution and Bitget Wallet for custody and transfers. Bitget’s tools can help with trade records and history that support tax reporting (remember to export transaction history for Form 8949 reconciliation).

International considerations

• Non‑U.S. residents: Taxation of U.S. equities held by nonresident aliens depends on U.S. source withholding and treaties. Many nonresident investors face U.S. withholding on dividends but not on capital gains for certain treaty‑protected investors; rules vary.

• Foreign‑listed stocks: Selling shares of non‑U.S. companies may create tax obligations in the investor’s resident country and/or in the source country; check local law and treaty rules.

• Cryptocurrency: The IRS treats cryptocurrency as property; capital gains rules apply to crypto sales and trades. If you ask "how much is capital gains on stocks" remember that similar principles apply to crypto but with additional recordkeeping complexity.

Recent and pending legislative changes

Tax law can change. Rates, thresholds, the NIIT, estate‑tax exemptions, and definitions of taxable investment income may be amended by new legislation.

• As of January 15, 2026, general federal tax rate structures for capital gains remained the preferential 0%/15%/20% tiers for long‑term gains and ordinary income rates for short‑term gains, with the NIIT continuing to apply to certain high‑income taxpayers (source: mainstream tax publications and reporting).

• Always verify the tax year thresholds and any new legislation before concluding exactly "how much is capital gains on stocks" for a specific sale.

See also

• Capital gains tax
• Qualified dividends
• Wash‑sale rule
• Form 8949
• Schedule D
• Net Investment Income Tax (NIIT)

References and further reading

Sources used to compile this guide include official IRS guidance and leading tax education resources (TurboTax, Bankrate, NerdWallet, Investopedia, Fidelity, H&R Block, Vanguard, The Motley Fool, and SmartAsset). For current thresholds and precise rates for a given tax year, consult the IRS and trusted tax publications.

If you want practical help exporting trade history or organizing sale records ahead of filing, Bitget provides trade‑history export tools and the Bitget Wallet for custody. Explore Bitget features to simplify recordkeeping and help estimate taxes, and consult a tax pro before making decisions based on projected tax outcomes.

Further action: download your broker‑provided 1099‑B and reconcile it with Form 8949 entries before filing. Use tax software or a CPA if your transactions are numerous or complex.