2025 Capital Gains Tax Rates
Capital gains tax depends on two things: how long you held the asset and how much you earn. Assets held for more than one year qualify for long-term rates, which are significantly lower than short-term rates. Short-term gains are taxed as ordinary income at your marginal rate.
Long-Term Capital Gains Rates (2025)
| Rate | Single | Married Filing Jointly | Head of Household |
|---|---|---|---|
| 0% | Up to $47,025 | Up to $94,050 | Up to $63,000 |
| 15% | $47,026 – $518,900 | $94,051 – $583,750 | $63,001 – $551,350 |
| 20% | Over $518,900 | Over $583,750 | Over $551,350 |
Short-Term Capital Gains Rates (2025)
Short-term gains on assets held one year or less are taxed as ordinary income. The federal rates range from 10% to 37% depending on your taxable income and filing status. A single filer earning $100,000 with a $20,000 short-term gain pays 24% on that gain—compared to 15% if the same gain were long-term. That's an extra $1,800 in tax for selling one day too early.
The Net Investment Income Tax (NIIT)
The NIIT is an additional 3.8% surtax on investment income—including capital gains, dividends, interest, and rental income. It applies when your modified adjusted gross income exceeds $200,000 (single) or $250,000 (married filing jointly). These thresholds have not been adjusted for inflation since the NIIT was introduced in 2013, which means more taxpayers hit them each year.
A married couple earning $300,000 with a $50,000 long-term capital gain pays 15% + 3.8% = 18.8% on that gain. The NIIT alone adds $1,900 to their tax bill. At the top bracket, the combined rate reaches 23.8% (20% + 3.8%) on long-term gains and up to 40.8% (37% + 3.8%) on short-term gains.
Real Estate: The Section 121 Exclusion
If you sell your primary residence and lived in it for at least 2 of the last 5 years, you can exclude up to $250,000 of gain from tax (single) or $500,000 (married filing jointly). This is the Section 121 exclusion and it's one of the most powerful tax breaks available. You can use it repeatedly as long as you wait at least two years between sales.
The exclusion applies only to your primary home. Investment properties, second homes, and vacation rentals do not qualify. If you rented the property before converting it to your primary residence, the rules get more complex—you may owe tax on the portion of gain attributable to non-qualifying use after 2008.
Cost Basis: Why It Matters
Cost basis is the original value of an asset for tax purposes. For stocks, it's the purchase price plus any broker commissions. For real estate, it's the purchase price plus capital improvements (a new roof, kitchen renovation, adding a bathroom) plus closing costs paid at purchase. Routine maintenance and repairs do not increase your basis.
A higher cost basis means lower taxable gains. If you bought a house for $300,000 and spent $50,000 on a kitchen remodel and $20,000 on a new HVAC system, your adjusted basis is $370,000. When you sell for $600,000, your taxable gain is $230,000—not $300,000. Keep receipts for every capital improvement.
1031 Exchange: Deferring Real Estate Gains
A 1031 exchange lets you defer capital gains tax on investment property by reinvesting the proceeds into a “like-kind” property. You must identify a replacement property within 45 days and close within 180 days. The exchange must be for investment or business property—your personal residence does not qualify.
The deferred gain reduces the basis of the replacement property, so you'll owe the tax eventually unless you do another 1031 exchange or hold the property until death (which triggers a stepped-up basis). Many real estate investors chain 1031 exchanges throughout their careers to defer gains indefinitely while building a larger portfolio.
Collectibles and Special Assets
Long-term gains on collectibles—art, antiques, coins, stamps, gems, precious metals, and wine—are taxed at a maximum rate of 28%, not the standard 0%/15%/20% rates. Short-term collectible gains are still taxed as ordinary income. If you're in the 24% bracket and sell a painting held for two years, you pay 24%. But if you're in the 32% bracket, the rate is capped at 28%, saving you 4%.
To estimate how capital gains affect your overall tax bracket, use the tax bracket calculator. For crypto-specific gain and loss tracking, try the crypto tax calculator.