How the estimate works
Adjusted basis is subtracted from sale proceeds, then any entered eligible exclusion reduces the recognized gain. Long-term gains stack above other taxable income across the 2026 0%, 15%, and 20% bands. Short-term gains use ordinary brackets.
Recognized gain = max(0, sale price − adjusted basis − eligible exclusion)
Official sources
- IRS Internal Revenue Bulletin 2025-45 — 2026 ordinary and capital-gain thresholds.
- IRS Net Investment Income Tax guidance — rate, thresholds, and lesser-of calculation.
Important limitations
- Does not calculate depreciation recapture, collectibles or qualified small business stock rates, installment sales, wash sales, or capital loss carryovers.
- Any home-sale or other exclusion must be entered only after eligibility is independently confirmed.
- NIIT uses entered modified AGI and treats this recognized gain as net investment income; Form 8960 can differ.
- Excludes state taxes, credits, estimated-payment rules, and tax already paid.
Frequently asked questions
How are long-term gains taxed?
Long-term gains stack above other taxable income and fill the 0%, 15%, and 20% capital-gain bands in order.
How are short-term gains taxed?
Short-term recognized gains are added to other taxable income and taxed through the ordinary income brackets.
What is adjusted basis?
This estimate adds entered improvements and selling costs to original basis. Actual basis rules depend on the asset and transaction.
What is NIIT?
The 3.8% Net Investment Income Tax can apply to the lesser of net investment income or modified AGI above the filing-status threshold.