How is capital gains tax calculated on a sale?

Long-term gains stack on top of your other taxable income and fill the 0%, 15% and 20% bands in order, so the same gain costs different amounts depending on what else you earned that year. On top of that sits the 3.8% net investment income tax above $200,000 single or $250,000 married.

What is depreciation recapture and why is it 25%?

If a property was ever rented, §1016(a)(2) reduces your basis by the depreciation you were allowed to take, whether or not you claimed it. That layer is taxed at your ordinary rate, capped at 25%, under §1(h)(1)(E), and no home-sale exclusion reduces it.

Does spreading a sale over several years lower the tax?

It can. Capital gains brackets and the NIIT threshold reset every January, so a gain taken in one lump clears them once while the same gain spread over years may stay in lower bands each year. An installment sale must be in place before closing.

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Capital gains tax calculator: what you will owe on a 2026 sale

Selling a rental, a business, land or a building? Enter your numbers and see the federal tax, depreciation recapture, the 3.8% tax and your state tax, added up.

By Hans Goldstein, EA, founder, Retirement Literacy Foundation · Updated October 18, 2026
Admitted to practice before the IRS.

Reviewed by Hans Goldstein, EA · Nonprofit education, nothing sold

Your sale

Sale price

What you paid for it

Depreciation taken (0 if none) Rental or business property. Enter it even if you never claimed it. Under §1016(a)(2) the IRS reduces your basis by the depreciation you were allowed, claimed or not.

Your other taxable income this year Your income outside the sale. It sets your bracket and whether the 3.8% tax applies.

Your state

Filing status

More details: selling costs, improvements, closing date

Selling costs

Improvements since you bought Capital improvements only, not repairs.

Expected closing date (optional)

What are you selling?A few states tax these differently. Washington, for one, exempts real estate entirely but taxes a business sale.

This was my primary residence for 2 of the last 5 years Applies the §121 exclusion: $250,000 single / $500,000 married. Never shelters depreciation recapture.

Enter your numbers and your tax bill appears below. 2026 rules.

YOUR ESTIMATED TAX BILL

Sale price
Less selling costs
Less adjusted basis
Less §121 home exclusion
Taxable gain
Depreciation recapture (up to 25%) §1250
Federal capital gains
Net investment income tax @ 3.8% §1411
State income tax
Total tax
Cash you actually keep

Not included: the federal alternative minimum tax (AMT, IRC Section 55). On a large gain with little other income it can raise the federal bill; a tax preparer figures it on Form 6251.

2026 rates. Federal long-term capital gains stack on top of your other taxable income at 0%, 15% or 20%; unrecaptured §1250 depreciation is taxed at your ordinary rate, capped at 25%, under §1(h)(1)(E), and the 0/15/20% bands are measured by the §1(h)(1) worksheet; the 3.8% net investment income tax applies above $200,000 single / $250,000 married (that threshold is written into the statute and is not indexed for inflation). The 3.8% test uses modified AGI, estimated here as your other taxable income plus the 2026 standard deduction ($16,100 single / $32,200 married) plus the gain. State tax uses each state’s top rate, except California, New Jersey and New York, which use their 2026 brackets (California: Franchise Tax Board schedules published October 2026). For every other state that taxes the gain this is a top-rate approximation: it overstates the tax if your income sits in a lower state bracket. Assumes you held the asset more than one year. This is education from a 501(c)(3), not tax advice. Take the number to your CPA before you sign anything.

Short answerCapital gains tax on a 2026 sale stacks up to four layers: federal long-term rates of 0%, 15% or 20%, up to 25% on depreciation you took on real estate, the 3.8% net investment income tax above $200,000 single or $250,000 joint, and state tax. California taxes the whole gain as ordinary income, up to 13.3%.

The three legal ways to not pay it all at once

There are exactly three routes in the code for deferring a gain like this, and each one has a hard deadline that closes the day you sign. The one-page sheet below covers what each does, what it costs, and, the part people miss, which ones must be set up before closing. No email needed.

§1031 like-kind exchange: real property only. 45 days to identify, 180 to close. Does not defer the boot.
Delaware Statutory Trust: a §1031 replacement you do not manage. Same deadlines.
§453 installment sale: spreads the gain over years. Must be in place before closing; once you have the cash it is gone.

Read the one-page deadlines sheet (PDF)

Free from a 501(c)(3). Nothing is sold.

Worked example: a $900,000 rental sale in 2026

A married couple sells a rental for $900,000. They paid $300,000, added $50,000 of improvements and took $100,000 of depreciation. Selling costs are 6%. Their other taxable income is $80,000. They live in Texas, which has no income tax.

Step	Arithmetic	Amount
Net sale price	$900,000 minus 6% costs ($54,000)	$846,000
Adjusted basis	$300,000 + $50,000 minus $100,000 depreciation	$250,000
Taxable gain	$846,000 minus $250,000	$596,000
Depreciation part ($100,000)	Ordinary rates, capped at 25%: $20,800 at 12% + $79,200 at 22%	$19,920
Rest of the gain ($496,000)	$433,700 at 15% + $62,300 at 20% (the part above $613,700 of taxable income)	$77,515
Net investment income tax	3.8% of income over $250,000. Income is about $708,200 ($80,000 + the $32,200 standard deduction + the gain), so 3.8% of $458,200	$17,412
State tax	Texas	$0
Total tax	19% of the gain	$114,847
Cash kept, before any loan payoff	$846,000 minus $114,847	$731,153

2026 brackets and standard deduction: IRS Rev. Proc. 2025-32. Depreciation rate cap: IRS Topic 409. 3.8% tax: IRS, net investment income tax. The same couple in California would owe about $53,600 more in state tax (2026 Franchise Tax Board rate schedules, FTB Tax News, October 2026). Put these numbers in the calculator above and you will get the same result.

What to do next

Find your depreciation total. Add up every year on Form 4562 or Schedule E. It lowers your basis even if you never claimed it.
Run your own numbers above, then use the “spread the gain” menu to see one year against several.
Check the side effects. A big gain can raise Medicare premiums two years later (IRMAA calculator) and make more of your Social Security taxable.
Take the printout to your CPA before you sign. A 1031 exchange has 45-day and 180-day deadlines that start at closing, and an installment sale must be written into the contract before closing.

2026 capital gains brackets

2026 federal long-term capital gains brackets (taxable income)

Rate	Single	Married filing jointly	Head of household
0%	Up to $49,450	Up to $98,900	Up to $66,200
15%	$49,451 to $545,500	$98,901 to $613,700	$66,201 to $579,600
20%	Over $545,500	Over $613,700	Over $579,600

Source: IRS Rev. Proc. 2025-32, section 4.03 (tax year 2026), checked October 10, 2026. The 3.8% NIIT thresholds ($200,000 single, $250,000 joint) are set by IRC §1411 and are not indexed (IRS). The 2026 standard deduction is $16,100 single and $32,200 joint; these brackets apply to income after it.

Drawing Social Security? Your real 0% room is smaller than this table shows. A gain counts toward the income that makes benefits taxable, so each dollar of gain can pull more of your benefit into taxable income and use up the 0% band faster. Example: a single filer age 65 or older with $40,000 of Social Security and no other income can take about $43,800 of long-term gain at 0% in 2026, not the $73,600 you get by adding the 0% bracket ($49,450) to the deductions ($24,150: standard $16,100, age 65 add-on $2,050, senior deduction $6,000). Even inside that room, the gain makes about $29,800 of the benefit taxable. Run it with the Social Security tax calculator before you rely on the 0% rate.

People also ask

How much capital gains tax would you pay on $100,000?

On a $100,000 long-term gain the federal rate is 0%, 15% or 20% depending on your taxable income; in 2026 the 15% band runs to $613,700 for married couples, so many pay $15,000 federal (15% of $100,000), and less if part of the gain fits in the 0% band. Depreciation on real estate is taxed at up to 25%, the 3.8% NIIT applies above $250,000 joint, and state tax comes on top.

How do I figure out how much capital gains tax I will pay?

Subtract your adjusted basis (purchase price plus improvements minus depreciation) and selling costs from the sale price. Split the gain into the depreciation part and the rest, place it on top of your other taxable income to find the rates, then add NIIT and state tax. The calculator above does those steps.

How much capital gains tax will I pay on $300,000?

For a married couple with modest other income, most of a $300,000 long-term gain lands in the 15% federal band, so the federal tax is at most $45,000 (15% of $300,000) and less if part of the gain fits in the 0% band. The 3.8% NIIT applies only to the part of modified adjusted gross income above $250,000. In California the whole gain is also taxed as ordinary income, often 9.3% or more. Run your own numbers above.

Sources: IRS Topic 409, capital gains; IRS net investment income tax; IRS Publication 544; IRS Topic 701, sale of your home. Checked October 10, 2026.

Hans Goldstein, founder of the Retirement Literacy Foundation

Who made this calculator
Hans Goldstein, EA, Founder and Executive Director, Retirement Literacy Foundation

The Retirement Literacy Foundation is a 501(c)(3) public charity (EIN 41-5062266) that gives free, plain-English retirement education to Southern California retirees. Hans is its unpaid Executive Director and draws no salary from the Foundation.

What it costs: nothing. The calculator and the class are free. Nothing is sold.

If you leave a phone number: we may call you about your request. Those calls are educational, and nothing is offered or sold.

Questions: call 714-584-4921 or read about the Foundation. General education, not tax, legal or investment advice.

Free class on Zoom: Big sales and taxes. Thursday, October 22, 2026, 4:00 PM Pacific (7:00 PM Eastern). One hour on what a sale really costs in tax and the legal ways to spread it. From a 501(c)(3). Nothing is sold. Save a seat.

Hans Goldstein is an Enrolled Agent, admitted to practice before the Internal Revenue Service. Not affiliated with or endorsed by the IRS.