How do you calculate capital gains tax owed on a sale?

Subtract your cost basis and any tax-free allowance from the sale price to get the taxable gain, then multiply by the applicable rate. On a 65,000 sale of an asset bought for 40,000 with no allowance, the taxable gain is 25,000, and at 15% the tax due is 3,750.

What is the difference between short-term and long-term capital gains tax?

In the US, short-term applies to assets held one year or less and is taxed at your ordinary income rate, up to 37%. Long-term applies past the one-year mark and is taxed at 0%, 15% or 20% depending on income, which is why the same 4,000 gain can owe 1,280 short-term versus 600 long-term at a 32%-to-15% rate swap.

Do I owe capital gains tax if I reinvest the money?

In the US and UK, yes for most personal investments; reinvesting proceeds does not defer the tax unless you use a specific vehicle designed for that, such as a like-kind exchange for US real estate or an ISA wrapper in the UK where gains inside the account are tax-free.

What is the UK Capital Gains Tax allowance right now?

The annual exempt amount is 3,000 per person for individuals, having been cut from higher levels in prior tax years. Gains above that threshold are taxed at rates that depend on the asset type and your income tax band, with residential property taxed higher than shares.

Can capital losses reduce the tax shown here?

Yes in practice, though this calculator only prices one sale at a time. Realized losses offset realized gains in the same tax year, and in the US up to 3,000 of net losses can also offset ordinary income annually, with any excess carried forward to future years.

Does the tax-free allowance field represent the same thing in every country?

No. Use it for the UK annual exempt amount, a state-specific exemption, or any other flat deduction your jurisdiction allows before tax applies. The US federal system has no equivalent flat allowance for most taxpayers, so leave that field at zero when modelling a US sale unless a specific exclusion, such as the primary residence exclusion, applies.

Capital gains tax calculator

The tax due this calculator shows is what you owe on the profit from selling an asset, not on the sale price itself. Only the gain above your cost basis and any allowance is taxed, and the rate that applies swings enormously depending on how long you held the position and which country's rules govern the sale.

Why the holding period changes everything

In the US, an asset sold within a year of purchase produces a short-term gain, taxed at your ordinary income rate, which can run as high as 37%. Hold it past the one-year mark and the same profit becomes long-term, taxed at 0%, 15% or 20% depending on your total taxable income for the year.

That single day matters more than almost any other input in this calculator. A trader sitting on a gain the day before the one-year anniversary is often better off waiting, because dropping from a 32% ordinary rate to a 15% long-term rate on a 20,000 profit is a 3,400 difference in tax owed for holding one extra day.

The calculator does not know your holding period on its own, so set the rate field to match: use your marginal income tax rate for anything held twelve months or less, and the relevant long-term bracket rate otherwise.

Three sale scenarios worth pricing out

Long-term US stock sale: bought for 40,000, sold for 65,000, held two years, no allowance entered. The gain is 25,000, and at a 15% long-term rate the tax comes to 3,750, leaving 21,250 of the 25,000 profit after tax.

UK share sale using the annual exempt amount: bought for 8,000, sold for 15,000, a 3,000 tax-free allowance applied, taxed at the 20% higher rate that applies to gains outside residential property. The raw gain is 7,000, the taxable gain after the allowance is 4,000, and the tax due is 800, leaving 6,200 of the 7,000 profit.

Short-term US crypto sale: bought for 10,000, sold for 14,000 eight months later, taxed at a 32% ordinary rate with no allowance. The gain is 4,000 and the tax is 1,280, compared with 600 if the same trade had qualified for a 15% long-term rate instead — the cost of selling four months too early.

Where a single flat rate stops matching reality

This model multiplies one gain by one rate, which fits a simple stock or crypto sale but breaks down once your income straddles a bracket boundary. US long-term gains stack on top of ordinary income, so part of a large gain can sit in the 15% band while the rest spills into the 20% band, and a single blended rate will always misstate one portion.

It also assumes the entire proceeds count as gain minus basis with nothing else adjusting the figure. Real sales often carry selling costs, reinvested dividends that raised the basis, depreciation recapture on rental property, or wash-sale disallowances on losses, all of which change the taxable amount before any rate is applied.

Net investment income tax in the US, an additional 3.8% surcharge that applies above certain income thresholds, is not built into this rate field either, so high earners should add it manually rather than assume the headline capital gains rate is the whole story.

Jurisdiction and timing differences that matter

US filers get a preferential rate for long-term gains and full ordinary-income treatment for short-term ones, with brackets that shift every tax year for inflation, so recheck the thresholds each filing season rather than reusing last year's numbers.

UK filers pay Capital Gains Tax on top of a shrinking annual exempt amount, currently 3,000 per person, with residential property gains taxed at a higher rate than shares and other assets; losses can be carried forward but must be reported to HMRC within four years of the tax year in which they arose.

Many EU countries and some US states tax capital gains as ordinary income with no long-term discount at all, so importing an American holding-period assumption into a different jurisdiction will understate the bill. Always check the local treatment of the specific asset class before trusting a single rate.

Frequently asked questions

How do you calculate capital gains tax owed on a sale?: Subtract your cost basis and any tax-free allowance from the sale price to get the taxable gain, then multiply by the applicable rate. On a 65,000 sale of an asset bought for 40,000 with no allowance, the taxable gain is 25,000, and at 15% the tax due is 3,750.
What is the difference between short-term and long-term capital gains tax?: In the US, short-term applies to assets held one year or less and is taxed at your ordinary income rate, up to 37%. Long-term applies past the one-year mark and is taxed at 0%, 15% or 20% depending on income, which is why the same 4,000 gain can owe 1,280 short-term versus 600 long-term at a 32%-to-15% rate swap.
Do I owe capital gains tax if I reinvest the money?: In the US and UK, yes for most personal investments; reinvesting proceeds does not defer the tax unless you use a specific vehicle designed for that, such as a like-kind exchange for US real estate or an ISA wrapper in the UK where gains inside the account are tax-free.
What is the UK Capital Gains Tax allowance right now?: The annual exempt amount is 3,000 per person for individuals, having been cut from higher levels in prior tax years. Gains above that threshold are taxed at rates that depend on the asset type and your income tax band, with residential property taxed higher than shares.
Can capital losses reduce the tax shown here?: Yes in practice, though this calculator only prices one sale at a time. Realized losses offset realized gains in the same tax year, and in the US up to 3,000 of net losses can also offset ordinary income annually, with any excess carried forward to future years.
Does the tax-free allowance field represent the same thing in every country?: No. Use it for the UK annual exempt amount, a state-specific exemption, or any other flat deduction your jurisdiction allows before tax applies. The US federal system has no equivalent flat allowance for most taxpayers, so leave that field at zero when modelling a US sale unless a specific exclusion, such as the primary residence exclusion, applies.

Sources

IRS Topic no. 409, Capital gains and losses — Defines the one-year short-term/long-term holding threshold and confirms long-term rates of 0%, 15% and 20% by income (current as published 2025).
GOV.UK — Capital Gains Tax: allowances — States the 2024/25 and current annual exempt amount of 3,000 for individuals (checked 2025).