Estimate the tax on a sale.

The one-year line

Federal capital gains tax splits along a single date: the one-year anniversary of the purchase, plus one day. A gain on an asset held one year or less is a short-term capital gain and is taxed as ordinary income at the taxpayer's marginal rate. A gain on an asset held longer is a long-term capital gain and is taxed at the preferential 0/15/20% federal rates. The rate differential is large enough that patience alone, holding an appreciated position a few extra weeks to cross the threshold, can be worth thousands of dollars per hundred thousand of gain.

The 0/15/20% brackets and how income stacks

The long-term rate a taxpayer actually pays depends on total taxable income. Ordinary income fills the ordinary brackets first. The long-term gain then stacks on top and is taxed at the long-term rate that corresponds to that income slot. A retired couple with $60,000 of taxable income who realizes a $30,000 long-term gain may pay zero federal capital gains tax, because the gain sits inside the 0% bracket. The same couple with $200,000 of taxable income pays 15%. This stacking behavior is the entire reason capital gain harvesting in low-income years is a repeatable planning move.

The 3.8% Net Investment Income Tax

On top of the underlying capital gains rate, high-income taxpayers owe the Net Investment Income Tax: an additional 3.8% on the lesser of net investment income or MAGI over $200,000 single, $250,000 married filing jointly, or $125,000 married filing separately. A long-term gain that qualifies for the 20% federal rate becomes a 23.8% federal rate once NIIT stacks on top. NIIT also captures interest, dividends, rental income, and non-qualified annuity earnings, so it interacts with retirement portfolio design well beyond a single sale.

Loss harvesting

Realized capital losses offset realized capital gains dollar-for-dollar, first within the same character (short against short, long against long), then across categories. Up to $3,000 of net loss above realized gains can offset ordinary income each year, with the rest carried forward indefinitely. Disciplined loss harvesting across a diversified portfolio can produce a stock of carryforward losses that make a future large discretionary sale materially cheaper. Watch for the wash-sale rule: repurchasing a substantially identical security within 30 days on either side of a loss sale disallows the loss.

The step-up in basis at death

Assets held outside retirement accounts receive a step-up in basis to fair market value on the decedent's date of death. Unrealized appreciation held until death is not taxed as capital gain to the heirs. This single provision is the reason experienced planners often recommend spending down pre-tax retirement accounts first while allowing highly appreciated taxable positions to pass through the estate. Note that this treatment does not apply to inherited retirement accounts, which retain their pre-tax character under the SECURE Act 10-year rule.

Installment sales and deferred sales trusts

A concentrated position or business sale can be structured to spread the recognized gain across multiple tax years. An installment sale under IRC Section 453 recognizes gain as payments are received, which can keep each year's income under a cliff (an IRMAA tier, a Social Security taxation threshold, the 20% long-term bracket). More advanced vehicles, including deferred sales trusts and charitable remainder trusts, let a client convert a lump-sum taxable event into a stream of income while addressing legacy or philanthropic goals. Structure choice depends on circumstances and requires coordinated tax and legal counsel.

How to use this estimate

This calculator returns the classification, the blended federal capital gains rate, the estimated federal tax including NIIT, and the net after-tax proceeds. State income tax is not included and can be substantial. Use the result to frame the timing conversation: whether to wait for long-term treatment, whether to stage the sale, whether to pair the gain with harvested losses, and whether a Roth conversion or charitable move belongs in the same tax year.