Capital Gains Taxes: 2024 & 2025 Rates

New legislation has been proposed that would significantly increase the long-term capital gains tax rate. As a result, it's important for taxpayers to understand their filing status, what their capital gains tax bracket is and how a change might affect their tax liability.

This article can help you understand the capital gains tax rates as they stand now and how they might change.

 

What is Capital Gains Tax?

Capital gains tax is the tax charged on profits made from the sale of a capital asset — such as a house, real estate, stocks or other investments. The tax is owed for the year that the profits from a sale were earned. The capital gains tax rate depends on the investor's income tax bracket and how long they have held investments for over a year.

For example, if you purchased a stock for $300 and sold it later for $400, you'd have a capital gain of $100. How much you owe in capital gains tax on that gain depends on multiple factors, including the capital gains tax brackets and your MAGI.

 

2025 Capital Gains Tax Rates

The first factor that determines your capital gains tax rate is how long you've held an asset. Generally speaking, capital gains taxes are categorized in two ways: short-term capital gains and long-term capital gains.

Long-Term Capital Gains Tax Rates

Long-term capital gains tax rates apply when an asset has been sold after being owned for more than one year. These rates are typically more favorable—either 0%, 15% or 20%— depending on your filing status, MAGI and whether you’re subject to the Net Investment Income Tax (NIIT).

Long-term Capital Gains Tax Rates for 2024 (filing in 2025): 

Filing Status	0%	15%	20%
Single	$0 to $47,025	$47,026 to $518,900	$518,901 or more
Married filing jointly	$0 to $94,050	$94,051 to $583,750	$583,751 or more
Married filing separately	$0 to $47,025	$47,026 to $291,850	$291,851 or more
Heads of household	$0 to $63,000	$63,001 to $551,350	$551,351 or more

 

Long-term Capital Gains Tax Rates for 2025 (filing in 2026): 

Filing Status	0%	15%	20%
Single	$0 to $48,350	$48,351 to $533,400	$533,401 or more
Married filing jointly	$0 to $96,700	$96,701 to $600,050	$600,051 or more
Married filing separately	$0 to $48,350	$48,351 to $300,000	$300,001 or more
Heads of household	$0 to $64,000	$64,001 to $559,300	$559,301 or more

 

Short-Term Capital Gains Tax Rates

Short-term capital gains taxes apply to profits from assets sold after being held for a year or less. Short-term capital gains are taxed based on ordinary income tax rates and can range from 10% to 37%, based on your income tax bracket and filing status.

Short-term Capital Gains Tax Rates for 2024 (filing in 2025): 

Filing Status	10%	12%	22%	24%	32%	35%	37%
Single	$0 to $11,600	$11,601 to $47,150	$47,151 to $100,525	$100,526 to $191,950	$191,951 to $243,725	$243,726 to $609,350	$609,351 or more
Married filing jointly	$0 to $23,200	$23,201 to $94,300	$94,301 to $201,050	$201,051 to $383,900	$383,901 to $487,450	$487,451 to $731,200	$731,201 or more
Married filing separately	$0 to $11,600	$11,601 to $47,150	$47,151 to $100,525	$100,526 to $191,950	$191,951 to $243,725	$243,726 to $365,600	$365,601 or more
Head of household	$0 to $16,550	$16,551 to $63,100	$63,101 to $100,500	$100,501 to $191,950	$191,951 to $243,700	$243,701 to $609,350	$609,351 or more

 

Short-term Capital Gains Tax Rates for 2025 (filing in 2026): 

Filing Status	10%	12%	22%	24%	32%	35%	37%
Single	$0 to $11,925	$11,926 to $48,475	$48,476 to $103,350	$103,351 to $197,300	$197,301 to $250,525	$250,526 to $626,350	$626,351 or more
Married filing jointly	$0 to $23,850	$23,851 to $96,950	$96,951 to $206,700	$206,701 to $394,600	$394,601 to $501,050	$501,051 to $751,600	$751,601 or more
Married filing separately	$0 to $11,925	$11,926 to $48,475	$48,476 to $103,350	$103,351 to $197,300	$197,301 to $250,525	$250,526 to $375,800	$375,801 or more
Head of household	$0 to $17,000	$17,001 to $64,850	$64,851 to $103,350	$103,351 to $197,300	$197,301 to $250,500	$250,501 to $626,350	$626,351 or more

To learn about what tax bracket you fall under, visit our article about tax brackets here.

 

How to Calculate Capital Gains

When you sell real estate, stocks or other assets, you can calculate capital gains tax by subtracting the amount you paid for the asset from the selling price. For example, if you purchased shares in a mutual fund for $1,000 and then sold them four years later for $3,000, your capital gain is $2,000.

Because short- vs. long-term capital gains are taxed differently, make sure to categorize your assets and calculate capital gains tax separately. If you sold those mutual fund shares after just six months, you would pay the short-term capital gains tax rate, which would be the same as your regular income tax rate. However, if you waited more than one year, the sale would fall under long-term capital gains tax brackets.

 

Understanding the Impact of the Capital Gains Tax

Investors pay capital gains taxes on the sale and qualified dividends of stocks, bonds, real estate and collectible assets. High-income earners are also subject to the Net Investment Income Tax (NIIT) if their MAGI exceeds the applicable threshold.

In short, the NIIT applies a tax of 3.8% on income from investments for certain filers who have a modified adjusted gross income more than certain incomes. More details about the NIIT can be found from the IRS here.

 

Capital Gains Exceptions

While most investments follow the standard capital gains tax brackets, certain assets have exceptions. 

Collectibles such as art, antiques, coins, stamps and certain precious metals are taxed at a fixed rate of 28% regardless of your income level. This higher rate applies even if you’ve held these items for more than one year. 

Owner-occupied real estate often qualifies for generous tax breaks available to individual taxpayers. This is known as the primary residence exclusion. Under this provision, you may be able to exclude up to $250,000 of capital gains ($500,000 for married couples filing jointly) from the sale of your home if you meet all of the following requirements: 

• You owned the home for a total of at least two years
• You used the home as your primary residence for a total of at least two years in the last five years before the sale
• You haven’t excluded the gain from another home sale in the two years before the sale

 

How to Help Mitigate Tax Liability on Capital Gains

For investors, capital gains taxes can be significant—especially for high earners.

As of 2025, the top federal capital gains tax rate is 20%, plus a 3.8% Net Investment Income Tax for high earners, totaling 23.8%. Capital gains taxes may be higher depending on the state in which the taxpayer resides, as some states impose their own capital gains taxes.

Still, there are ways to help manage the impact of capital gains taxes, including the following considerations:

Managing Higher Income Years

If you anticipate a year of unusually high income, there are ways to reduce your taxable income—such as increasing itemized deductions.

You can consider options such as increasing charitable donations, pre-paying mortgage payments with tax-deductible interest, deducting business expenses or paying off medical and dental bills.

Dividend Rebalancing

Instead of automatically reinvesting dividends back into the same securities that generated them, dividend rebalancing allows you to direct those dividends toward underperforming assets in your portfolio.

This serves two purposes: it helps maintain your desired asset allocation without selling positions (which would trigger capital gains tax), and it allows you to purchase undervalued assets at potentially favorable prices. By redirecting dividend income to rebalance your portfolio, you can reduce the need for selling appreciated assets and thus defer capital gains taxes. 

Tax Loss Harvesting

Tax loss harvesting can help offset capital gains taxes by selling investments that have decreased in value. When you sell an investment at a loss, you can use that loss to reduce capital gains and potentially lower your tax bill. 

For example, if you’ve realized $10,000 in capital gains this year but also sold underperforming investments at a $7,000 loss, you’ll only owe capital gains tax on the net gain of $3,000. If your losses exceed your gains, you can use up to $3,000 of the excess loss to offset ordinary income and carry forward any remaining losses to future tax years. 

This works best in taxable accounts and should be implemented with caution to avoid “wash sale” rules, which prohibit claiming a loss on a security if you buy a “substantially identical” investment within 30 days before or after the sale. 

Time Investment Sales

If the implementation date of the tax increase is not made retroactive, an investor who would be subject to the higher rate can choose to sell investments prior to the effective date and lock in the lower capital gains rate.

Leverage Tax-Advantaged Retirement Plans

Work to maximize tax-advantaged contributions to health savings accounts, 529 education savings plans and retirement accounts. Most retirement plans do not require tax to be paid until gains are withdrawn. At that point, the gains are typically taxed at your regular income tax rate and not as capital gains.

Plan Carefully for Business Sales

The sale of a business can result in a capital gain worth millions of dollars. Business owners who may not normally fall into the category of income over $1 million might suddenly have to pay more than 40% of their earnings from a business sale in federal capital gains taxes.

However, there are options for structuring the sale of a business to lower tax liability, such as an installment sale, in which you take a portion of the payout annually for several years. If your business is in transition, it's a good idea to meet with a financial or tax advisor at least six to nine months ahead of the sale. They can help you determine the best way to structure the sale of your business to minimize capital gains tax liability.

Consider working with a business planner and a tax professional to discover what options might be best for you.

 

When Do You Pay Capital Gains Taxes?

Capital gains taxes are due in the tax year when you realize the gain, meaning when you actually sell the asset. Unlike regular income, where taxes are typically withheld from paychecks, you’re responsible for calculating and paying capital gains taxes yourself. This is done either through estimated tax payments or when filing your annual return. 

For questions regarding capital gains tax or help with your wealth planning needs, contact our financial professionals today.