How this calculator works
Tax year: 2026, United States. Long-term capital gains and qualified dividends use three rates: 0%, 15% and 20%. The gain sits on top of ordinary taxable income, so part of it can fall in the 0% band, part in the 15% band and the rest at 20%. The band limits depend on filing status. This model takes ordinary taxable income after deductions and assumes the gain qualifies as long-term, which normally means the asset was held for more than one year. It leaves out short-term gains, which are taxed as ordinary income, the 3.8% net investment income tax, state income tax, the alternative minimum tax and any capital losses that offset the gain.
Formula
Total taxable income = ordinary taxable income + long-term gain. The 0% band covers gain up to the zero-rate amount for the filing status. The 15% band covers gain between the zero-rate and 15% amounts. Any remaining gain is taxed at 20%. Tax = 15% x gain in the 15% band + 20% x gain in the 20% band. Effective rate = tax / gain.
Worked example
A single filer with $60,000 of ordinary taxable income and a $30,000 long-term gain has $90,000 of taxable income. The 0% band ends at $49,450, so the whole gain is above it and below the $545,500 limit, giving $4,500 of tax at 15%, an effective rate of 15%. If ordinary income were $40,000 instead, $9,450 of the gain would be taxed at 0% and $10,550 at 15%, for $1,582.50.
Frequently asked questions
What makes a gain long-term?
Holding the asset for more than one year. A gain on an asset held for one year or less is short-term and is taxed at the same rates as wages and other ordinary income.
Why does part of my gain fall in the 0% band?
The 0% band is measured in total taxable income, not in the gain alone. If ordinary income is low enough, the first part of the gain can still fit under the zero-rate limit.
Is the net investment income tax included?
No. The 3.8% surtax applies to net investment income above $200,000 for single filers and $250,000 for joint filers. It is separate from the capital gains rates and is not modelled here.
Are qualified dividends treated the same way?
Yes. Qualified dividends use the same three rate bands and stack on ordinary income in the same way. Enter them with the long-term gain.