0% (e.g., for 0% long-term capital gains rate)
15% (e.g., for 15% long-term capital gains rate)
20% (e.g., for 20% long-term capital gains rate)
Short-Term (Ordinary Income Rate)
Estimated Capital Gains Tax
$0.00
Understanding Capital Gains Tax
Capital gains tax is a tax on the profit you make from selling an asset that has increased in value. This asset could be anything from stocks, bonds, and mutual funds to real estate, collectibles, or even cryptocurrency. The profit you realize from selling an asset for more than you paid for it is called a capital gain.
The tax rate applied to your capital gains depends on two primary factors:
Holding Period: Whether the gain is classified as short-term or long-term.
Your Income Level: The tax rate for long-term capital gains is often lower than your ordinary income tax rate.
Short-Term vs. Long-Term Capital Gains
Short-Term Capital Gains: These are profits from selling assets you've owned for one year or less. Short-term capital gains are taxed at your ordinary income tax rates, which can be significantly higher than long-term rates.
Long-Term Capital Gains: These are profits from selling assets you've owned for more than one year. Long-term capital gains are taxed at preferential rates, which are typically 0%, 15%, or 20% for most taxpayers, depending on their taxable income.
How the Calculator Works
This calculator helps you estimate your potential capital gains tax liability. It works by:
Calculating the Capital Gain: It subtracts your purchase price from your sale price to determine the total capital gain.
Determining Holding Period: It uses the holding period in years to distinguish between short-term and long-term gains.
Applying the Correct Tax Rate:
If the holding period is one year or less, it assumes the gain is short-term and will be taxed at your ordinary income rate (which you select via the "income bracket" dropdown).
If the holding period is more than one year, it applies the selected long-term capital gains tax rate (0%, 15%, or 20%).
Calculating the Tax: It multiplies the capital gain by the applicable tax rate to estimate the tax owed.
Note: This calculator provides an estimate. Actual tax liability may vary based on specific tax laws, deductions, credits, and other personal financial circumstances. Consult with a qualified tax professional for personalized advice.
function calculateCapitalGainsTax() {
var purchasePrice = parseFloat(document.getElementById("purchasePrice").value);
var salePrice = parseFloat(document.getElementById("salePrice").value);
var holdingPeriod = parseFloat(document.getElementById("holdingPeriod").value);
var taxYear = document.getElementById("taxYear").value;
var incomeBracket = document.getElementById("incomeBracket").value;
var taxRate = 0;
var taxType = "";
var resultValue = document.getElementById("result-value");
var taxTypeInfo = document.getElementById("tax-type-info");
// Clear previous results
resultValue.textContent = "$0.00";
taxTypeInfo.textContent = "";
// Input validation
if (isNaN(purchasePrice) || isNaN(salePrice) || isNaN(holdingPeriod) || purchasePrice < 0 || salePrice < 0 || holdingPeriod < 0) {
alert("Please enter valid positive numbers for all input fields.");
return;
}
var capitalGain = salePrice – purchasePrice;
if (capitalGain <= 0) {
resultValue.textContent = "$0.00";
taxTypeInfo.textContent = "No capital gain realized.";
return;
}
if (holdingPeriod <= 1) {
// Short-term capital gain
taxType = "Short-Term Capital Gain";
if (incomeBracket === "shortTerm") {
// This is a simplification. Actual short-term rates depend on income brackets.
// For this calculator, we'll use a placeholder or prompt user to select a specific rate if available.
// For now, we'll assume the user selected "Short-Term (Ordinary Income Rate)" and we need to know their actual bracket.
// Since we don't have that info, we'll indicate it's based on ordinary income.
taxRate = 0.25; // Example: Using a common higher bracket rate as an example. User should ideally input their specific bracket.
taxTypeInfo.textContent = "Taxed at your ordinary income rate. Using an example rate of 25%.";
} else {
// If user selected a specific percentage for short-term, it's unusual but we'll use it.
taxRate = parseFloat(incomeBracket) / 100;
taxTypeInfo.textContent = "Taxed at your ordinary income rate.";
}
} else {
// Long-term capital gain
taxType = "Long-Term Capital Gain";
if (incomeBracket === "0") {
taxRate = 0.00;
} else if (incomeBracket === "15") {
taxRate = 0.15;
} else if (incomeBracket === "20") {
taxRate = 0.20;
} else {
// Fallback for unexpected values, though select options should prevent this.
taxRate = 0.15; // Default to 15% if something goes wrong
}
taxTypeInfo.textContent = "Taxed at the long-term capital gains rate.";
}
var estimatedTax = capitalGain * taxRate;
resultValue.textContent = "$" + estimatedTax.toFixed(2);
taxTypeInfo.textContent += " (" + taxType + ")";
}