Short-Term Capital Gain Calculator
Use this calculator to estimate your short-term capital gain or loss and the potential tax liability. Short-term capital gains are profits from the sale of an asset held for one year or less, and they are typically taxed at your ordinary income tax rate.
Calculation Results:
Net Sale Price:
Adjusted Cost Basis:
Capital Gain/Loss:
Taxable Short-Term Gain:
Estimated Short-Term Capital Gains Tax:
Net Profit After Tax:
Understanding Short-Term Capital Gains
A short-term capital gain occurs when you sell a capital asset (like stocks, bonds, real estate, or collectibles) that you've owned for one year or less, and the sale price exceeds your adjusted cost basis. Conversely, if the sale price is less than your adjusted cost basis, you incur a short-term capital loss.
What is a Capital Asset?
Most property you own for personal use or investment is a capital asset. This includes your home, car, investments (stocks, bonds, mutual funds), and even collectibles like art or antiques.
Short-Term vs. Long-Term Capital Gains
The distinction between short-term and long-term capital gains is crucial because they are taxed differently:
- Short-Term Capital Gains: These are profits from assets held for one year or less. They are taxed at your ordinary income tax rates, which can be significantly higher than long-term rates.
- Long-Term Capital Gains: These are profits from assets held for more than one year. They are generally taxed at preferential rates (0%, 15%, or 20% for most taxpayers), depending on your taxable income.
How Short-Term Capital Gains Are Taxed
Unlike long-term gains, short-term capital gains are added to your ordinary income (like wages, salaries, and interest income) and are taxed at your marginal income tax bracket. This means if you are in the 24% income tax bracket, your short-term capital gains will also be taxed at 24%.
Calculating Your Capital Gain or Loss
The basic formula for calculating a capital gain or loss is:
Capital Gain/Loss = Net Sale Price - Adjusted Cost Basis
- Net Sale Price: This is the asset's sale price minus any selling expenses (e.g., broker commissions, advertising costs, legal fees).
- Adjusted Cost Basis: This is the original purchase price of the asset plus any purchase expenses (e.g., commissions, closing costs, improvements that add value).
Using the Calculator
Our Short-Term Capital Gain Calculator simplifies this process:
- Asset Purchase Price: Enter the amount you originally paid for the asset.
- Purchase Expenses: Include any costs directly associated with acquiring the asset.
- Asset Sale Price: Enter the amount you sold the asset for.
- Selling Expenses: Include any costs directly associated with selling the asset.
- Ordinary Income Tax Rate: Input your marginal federal income tax bracket percentage.
The calculator will then provide you with the net sale price, adjusted cost basis, the actual capital gain or loss, the taxable gain (which is zero if you have a loss), the estimated short-term capital gains tax, and your net profit after tax.
Example Scenario:
Let's say you bought 100 shares of XYZ stock for $100 per share, incurring $20 in commission fees. Three months later, you sold all 100 shares for $120 per share, paying another $25 in commission fees. Your ordinary income tax rate is 22%.
- Asset Purchase Price: $10,000 (100 shares * $100/share)
- Purchase Expenses: $20
- Asset Sale Price: $12,000 (100 shares * $120/share)
- Selling Expenses: $25
- Ordinary Income Tax Rate: 22%
Using the calculator:
- Net Sale Price: $12,000 – $25 = $11,975
- Adjusted Cost Basis: $10,000 + $20 = $10,020
- Capital Gain: $11,975 – $10,020 = $1,955
- Taxable Short-Term Gain: $1,955 (since it's a gain)
- Estimated Short-Term Capital Gains Tax: $1,955 * 0.22 = $430.10
- Net Profit After Tax: $1,955 – $430.10 = $1,524.90
This example demonstrates how the calculator helps you quickly understand the financial implications of your short-term asset sales.