Capital Gains Tax Cheat Sheet
Overview
Capital gains tax applies to profits earned from selling assets like stocks, bonds, real estate, and collectibles. The tax rate depends on how long the asset was held before selling.
2025 Capital Gains Tax Rates
*Short-Term Capital Gains (Held ≤ 1 Year)*
- Taxed at ordinary income tax rates (10% – 37% based on income bracket).
*Long-Term Capital Gains (Held > 1 Year)*
| Tax Rate | Single Filers | Married Filing Jointly | Head of Household |
|---|---|---|---|
| 0% | Up to $48,350 | Up to $96,700 | Up to $64,750 |
| 15% | $48,351 – $533,400 | $96,701 – $600,050 | $64,751 – $566,700 |
| 20% | Over $533,400 | Over $600,050 | Over $566,700 |
Special Considerations
- Home Sales Exclusion: Up to $250,000 ($500,000 for married couples) of gains from primary residence sales may be tax-free.
- Collectibles & Art: Taxed at 28% regardless of holding period.
- Qualified Dividends: Taxed at long-term capital gains rates.
Tax Planning Strategies
- Hold Investments for Over a Year: Qualify for lower long-term rates.
- Tax-Loss Harvesting: Offset gains by selling underperforming assets.
- Utilize Retirement Accounts: Gains in IRAs and 401(k)s grow tax-deferred.
- Consider Opportunity Zones: Invest in designated areas for tax benefits.
Common Pitfalls & How to Avoid Them
- Selling Too Soon: Short-term gains are taxed at higher rates.
- Ignoring Tax Bracket Adjustments: Plan sales strategically to stay in lower brackets.
- Overlooking Exemptions: Research exclusions for home sales and reinvestment options.
Tools & Resources
- IRS tax calculators for estimating capital gains liabilities.
- Investment tax planning software for optimizing sales timing.
- Financial advisors for personalized tax strategies.