The 2025 capital gains tax rates depend on your income level and how long you held the asset
The federal capital gains tax rate for 2025 is either 0%, 15%, or 20%, depending on your total taxable income. These are the rates for long-term capital gains—profits from selling assets you owned for more than one year. If you sell an asset within one year, the profit is taxed as ordinary income at your regular tax bracket rate, which can be much higher.
The income thresholds that determine which rate applies to you change each year based on inflation. For 2025, the 0% rate applies to single filers earning up to $47,025, married couples filing jointly up to $94,050, and heads of household up to $62,975. The 15% rate applies to income above those amounts but below $518,900 (single), $583,750 (married filing jointly), or $551,350 (head of household). Income above those upper limits is taxed at 20%.
Your state may also charge a capital gains tax on top of the federal rate. State rates vary widely—some states have no capital gains tax at all, while others charge between 5% and 13.3%. Check your state's tax authority website to learn what applies where you live.
Key Takeaways
- Long-term capital gains (assets held over one year) are taxed at 0%, 15%, or 20% federally in 2025, based on your total income.
- Short-term capital gains (assets sold within one year) are taxed at your ordinary income tax rate, which is typically higher than long-term rates.
- The income thresholds for each rate bracket change yearly; for 2025, the 0% bracket ends at $47,025 for single filers and $94,050 for married couples filing jointly.
- Your state may impose an additional capital gains tax ranging from 0% to over 13%, depending on where you live.
- Losses from investments can offset gains, potentially lowering your taxable capital gains for the year.
How long you held the asset matters
The length of time you owned an asset before selling it determines which tax rate applies. If you bought a stock, rental property, or other investment and sold it more than one year later, you have a long-term capital gain, which qualifies for the lower 0%, 15%, or 20% rates. The holding period is measured from the purchase date to the sale date.
If you sell an asset within one year of buying it, the profit counts as a short-term capital gain and is taxed as ordinary income. This means it is added to your wages, self-employment income, and other earnings, then taxed at whatever bracket your total income falls into. For 2025, ordinary income tax brackets range from 10% to 37% depending on your filing status and total income, so short-term gains are almost always taxed at a higher rate than long-term gains.
The IRS counts the holding period from the day after you buy to the day you sell. If you bought shares on January 15 and sold them on January 16 of the following year, that qualifies as long-term. If you sold them on January 15 of the following year, it is still short-term.
Income thresholds for each rate bracket in 2025
Your filing status determines which income threshold applies to you. The thresholds are adjusted each year for inflation, so they differ from 2024.
| Filing Status | 0% Rate (up to) | 15% Rate (up to) | 20% Rate (above) |
|---|---|---|---|
| Single | $47,025 | $518,900 | $518,900 |
| Married Filing Jointly | $94,050 | $583,750 | $583,750 |
| Head of Household | $62,975 | $551,350 | $551,350 |
| Married Filing Separately | $47,025 | $291,875 | $291,875 |
These thresholds are based on your taxable income, not your total income. Taxable income is what remains after you subtract the standard deduction or itemized deductions. For example, if you are single with $60,000 in wages and $10,000 in long-term capital gains, your total income is $70,000. After subtracting the 2025 standard deduction of $14,600 for single filers, your taxable income is $55,400. Your capital gains would be taxed at 15% because that amount exceeds the 0% threshold of $47,025.
If you are married filing jointly with combined wages of $100,000 and long-term capital gains of $50,000, your total income is $150,000. After subtracting the standard deduction of $29,200, your taxable income is $120,800. All of your capital gains would be taxed at 0% because your taxable income is below the $94,050 threshold.
State capital gains taxes vary widely
Nine states have no capital gains tax at all: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and New Hampshire (though New Hampshire taxes only investment income, not capital gains). The remaining states and Washington, D.C. impose their own capital gains tax on top of the federal rate.
State rates range from about 5% in states like Colorado and Kansas to 13.3% in California. Some states tie their capital gains tax to ordinary income tax brackets, so the rate depends on your income level within that state. Others charge a flat rate regardless of income. A few states, including New York and Massachusetts, have recently enacted or modified capital gains taxes, so rates and rules may have changed recently.
To find your state's rate, search "[your state] capital gains tax" on your state's Department of Revenue or Taxation website. If you live in one state but sold an asset located in another state, you may owe tax to both states, though you can usually claim a credit on your federal return for taxes paid to other states.
How to calculate your capital gains tax
Start by finding the total gain or loss on each asset you sold. Subtract what you paid for the asset (your cost basis) from what you sold it for. If you bought 100 shares at $50 per share for $5,000 and sold them at $75 per share for $7,500, your gain is $2,500.
Separate your gains into long-term and short-term. Long-term gains are taxed at the preferential rates; short-term gains are taxed as ordinary income. If you have losses, subtract them from gains of the same type first. If you have a $3,000 long-term gain and a $1,000 long-term loss, your net long-term gain is $2,000.
If your losses exceed your gains in a year, you can deduct up to $3,000 of the net loss against your ordinary income. Any loss beyond $3,000 carries forward to future years. Add your net long-term capital gains to your other income to find your total taxable income, then explore the appropriate rate based on your filing status and income level.
Many people use tax software or work with a tax professional to calculate this correctly, especially if they sold multiple assets or have complex income sources. The IRS Form 8949 and Schedule D are the official forms used to report capital gains and losses.
Special situations that affect capital gains tax
Certain types of gains are taxed differently. If you sell real estate that was your primary residence, you may be able to exclude up to $250,000 of the gain from tax (or $500,000 if you are married filing jointly), provided you owned and lived in the home for at least two of the last five years. This exclusion applies once every two years.
Collectibles—such as art, antiques, and precious metals—are taxed at a maximum rate of 28% on long-term gains, even if your income would normally put you in the 15% or 0% bracket. Gains from selling certain small business stock may may have access to for a partial exclusion under Section 1202 of the tax code, though this has strict requirements.
Dividends from stocks are also taxed as capital gains if they are may have access to dividends. Most dividends from U.S. corporations and certain foreign corporations are may have access to and taxed at the same 0%, 15%, or 20% rates as long-term capital gains. Non-may have access to dividends are taxed as ordinary income.
Frequently Asked Questions
Do I owe capital gains tax if I sold an asset at a loss?
No, you do not owe tax on a loss. Instead, you can use the loss to reduce any capital gains you had that year. If your losses exceed your gains, you can deduct up to $3,000 of the net loss against your regular income. Any remaining loss carries forward to future years.
What if I inherited an asset and then sold it?
Inherited assets receive a "step-up in basis," meaning your cost basis is the asset's value on the date of the person's death, not what they originally paid for it. If you inherited a house worth $300,000 and sold it a month later for $310,000, your gain is only $10,000, not the full difference between the sale price and what the original owner paid decades earlier.
How do I report capital gains on my tax return?
You report capital gains on IRS Form 8949 (Sales of Capital Assets), then transfer the totals to Schedule D (Capital Gains and Losses), and finally to your Form 1040. If you use tax software, it typically walks you through these forms. Your brokerage or investment company sends you a Form 1099-B showing the sales you made during the year.
Are cryptocurrency gains taxed the same way as stock gains?
Yes. The IRS treats cryptocurrency as property, not currency. If you hold crypto for more than one year before selling, the gain is taxed as a long-term capital gain at the 0%, 15%, or 20% rates. If you sell within one year, it is taxed as a short-term gain at your ordinary income rate. Trading one cryptocurrency for another is also a taxable event.
Can I reduce my capital gains tax by timing when I sell?
Yes, in some cases. If you have both gains and losses, you can sell losing positions to offset gains in the same year, a strategy called tax-loss harvesting. You can also spread sales across two calendar years if you are close to a tax bracket threshold. However, the IRS has a "wash sale" rule that prevents you from buying back the same or substantially identical security within 30 days of selling it at a loss.