Capital Gains Tax on Stocks (Short-Term vs Long-Term)

Generally: sale proceeds minus cost basis on a capital asset (like shares). Positive difference = gain; negative = loss.

Cost basis usually starts as what you paid (plus commissions) and can adjust for corporate actions and certain account types.

Hold more than one year and you typically qualify for long-term federal rates (often 0/15/20% depending on taxable income). State tax and the 3.8% Net Investment Income Tax (NIIT) for higher earners can add more.

Hold one year or less and gains are usually taxed as ordinary income — which can be much higher.

Know approximate tax drag so you’re not surprised. A capital gains tax calculator turns basis + proceeds + holding period into a planning sketch.

Remember state tax, NIIT, wash-sale rules on losses, and your full tax return can change the bill — calculator estimates aren’t filings.

Track purchase dates so you know when long-term kicks in.

Don’t hold a broken thesis only to save a few tax points — opportunity cost and further losses can dwarf the rate difference.

For multi-lot positions, understand average cost vs specific lot ID before year-end planning.

This guide is US-focused education. Non-US readers should follow local rules; everyone should verify details for their situation.