What is capital gains tax in the US?
Capital gains tax is the federal tax on the profit you make when you sell a stock, ETF or fund for more than you paid. Nothing is taxed while you hold. Hold for more than one year and the gain is long-term, taxed at 0, 15 or 20 % depending on your taxable income — for 2026, 0 % up to $49,450 for a single filer ($98,900 married filing jointly), 15 % up to $545,500 ($613,700), 20 % above. Sell within a year and the gain is short-term, taxed like wages at 10–37 %. Most states tax the gain again.
One red dot: the tax only comes on the day you sell.
How it works
- Only when you sell. A stock that doubles in your account is not taxed until the day you sell. The gain is the sale price minus your cost basis.
- The one-year line. Held one year or less: short-term, added to your income and taxed at your ordinary rate. Held more than one year — count from the day after you bought — long-term, at the lower 0/15/20 % rates.
- The 0 % band is real. A single filer with $40,000 of taxable income in 2026 pays no federal tax at all on long-term gains that fit under $49,450. The gains themselves count towards that limit.
- Losses help. Losses offset gains. If you end the year with a net loss, up to $3,000 of it can offset wages and other income; the rest carries forward to later years — but see the wash sale rule.
- High earners pay 3.8 % more. Above $200,000 of income (single) the net investment income tax comes on top.
- Then your state. Most states tax gains as ordinary income at their own rates; a few have no income tax at all. See state tax on investments.
The worked example
You buy shares for $5,000 and sell them 18 months later for $8,000. Gain: $3,000, long-term. As a single filer with $60,000 of taxable income you are in the 15 % band: $450 federal tax. Sell the same shares after 11 months instead, in the 22 % ordinary bracket: $660. In California add roughly 9 % state tax; in Florida or Texas add nothing.
Figures for 2026 from irs.gov (Rev. Proc. 2025-32 and IR-2025-111), checked September 2026. Your state may tax the same income again. Kiggo does not calculate your tax — your broker reports to you on Form 1099, and the IRS, your state and a tax professional decide.
Why the date matters
The difference between short-term and long-term is the single most expensive thing a US beginner can get wrong: the same $3,000 gain can cost $0, $450 or $1,110 depending only on when you sell and what else you earn. Kiggo shows you the price and the move — the calendar is yours.
The typical beginner's mistake
Selling a winner in month eleven "to lock in the gain" — and turning a 15 % long-term gain into a 24 % short-term one. Waiting five weeks would have halved the tax.
How you see it in Kiggo
Kiggo shows the price, the move and the 52-week range, and if you enter your own purchases in Kiggo's portfolio, it shows your gain before any tax. Kiggo does not know your income bracket or your state and does not calculate your tax.
Related terms
Frequently asked questions
What are the long-term capital gains rates for 2026?
0 %, 15 % and 20 %. For a single filer: 0 % up to $49,450 of taxable income, 15 % up to $545,500, 20 % above. Married filing jointly: $98,900 and $613,700. Short-term gains are taxed as ordinary income (10–37 %). Source: Rev. Proc. 2025-32.
Do I pay capital gains tax if I do not sell?
No. Federal capital gains tax is triggered only by a sale (or exchange). Holding a stock that rises costs nothing. Dividends are taxed separately when paid.
How much of a loss can I deduct?
Losses first offset gains. A remaining net loss can offset up to $3,000 of other income per year ($1,500 married filing separately); anything left carries forward indefinitely.
Kiggo explains — Kiggo does not advise. We never tell you what to buy or sell, and key figures can only be compared between companies in the same industry. The decision is yours. Last updated 2026-09-22.
Written by Claus Frisch, founder of Kiggo. Not an adviser, not a bank — Kiggo explains, you decide.
