To figure out the size of your capital gains, you need to know your basis. Basis is the amount you paid for an asset. How much you owe in taxes - your tax liability - stems from the difference between the sale price of your asset and the basis you have in that asset. In plain English, that means you pay tax based on your profit.
What is the tax rate for capital gains?
Instead of falling into your ordinary income tax bracket, the tax rate for these gains is between 0% and 20%. Your income will still determine your tax rate, but the percentage won’t necessarily be the same as your ordinary income tax bracket. According to the IRS, there are a few situations in which the capital gains tax rate could be 0%:
How much capital gains tax do I pay on sold assets?
However, you may only pay up to 20% for capital gains taxes. And unlike ordinary income taxes, your capital gain is generally determined by how long you hold an asset before you sell it. Use our capital gains calculator for the 2022-2023 tax season to determine how much tax you might pay on sold assets.
