This capital gains tax calculator is free to use. It shows both federal and state taxes. It automatically uses the 2022 federal tax brackets on the capital gains. And due to the complexity of state taxes, you can enter your state’s tax rate manually.
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Due to the complexity of tax situations, we don’t guarantee these results. It’s often best to consult a tax professional for more information. Although, the tax calculator can give you a good idea of what capital gain taxes you might owe.
You can also continue reading to learn how this calculator works. On top of that, you’ll find other useful insight and investing resources…
There are many investing opportunities today. And certain stocks can lead to huge capital gains! But as a result, that might mean paying more in capital gain taxes (a good problem to have).
Capital Gains Tax Calculator
For most people, if they realize capital gains, they have other income for the year as well (normal wages, etc.). And this other Taxable Income helps determine what tax bracket/s the capital gains will be in.
The difference between your Purchase Value and Sale Value is the capital gain on your investment. The capital gains tax calculator uses these numbers to determine the correct amount of tax to pay.
Capital Gains Tax Example
As an example, let’s say someone earns $50,000 in normal taxable income for the year. For 2022, this would put a single filer in the 22% marginal tax bracket.
So, if that person also sold an investment in the same year (held less than a year), taxes on those gains would be taxed starting in the same 22% bracket.
Going further, let’s say this same person locked in a $10,000 investment gain on top of the other income. This additional $10,000 falls within the 22% bracket and would result in a $2,200 bill on those gains.
If the investment gain is even larger, let’s say $100,000 then it’d be partially taxed at the 22% rate and also some in the 24% tax bracket. On that $100,000 gain, there’d be a $23,218.50 tax bill and they’d be considered in the 24% tax bracket.
Here’s how to find the total tax on the investment gain (using the tax bracket reference above)… ($89,075-$50,000)*.22+($100,000-($89,075-$50,000))*.24… and if you have really big gains, they might be spread out over three or four tax brackets.
For investments held over a year, it’s similar logic but fewer brackets. Here’s a reference for 2022 long-term capital gain taxes. For example, let’s say a person earned $50,000 in taxable income. This would then start other long-term capital gains in the 15% tax bracket. So, let’s say this person also locked in a $100,000 investment gain (held over a year). This capital gain starts and stays within the 15% tax bracket. So, the tax comes in at $15,000.
Don’t Pay Uncle Same More Than Required
It’s important to pay your taxes in full. Although, due to the complexity of the tax code, it’s hard to know what you owe. On top of that, you can limit your taxes with some simple planning.
With the capital gains tax calculator above, you can plan ahead for selling investments. By timing when you lock in gains, you can space out your tax bill with the potential to lower overall taxes.
Here’s an article that shows you ways to legally avoid paying capital gains taxes. And as your portfolio grows, tax planning becomes vital to save more of your hard earned income.
Investing Calculators and Opportunities
To see how your portfolio can grow, here’s a free investment calculator. It gives an annual breakdown of an investment or portfolio’s potential growth. Going one step further, here are some stocks and other investments to consider as well..
Overall, we hope this research comes in handy. We also provide many more free tools like the capital gains tax calculator and other research. So, feel free to explore more…