Did you profit from selling a house, some investments, or even a car this year? If so, you’ll likely need to report the sale on your income tax return due to the long-term capital gains tax. Here's what you should know:

Read our full article for more information.

Do I have a long-term capital gain?

• Long-term capital gain: To qualify as a long-term gain, you must own a capital asset — meaning that house, investment, or car you sold — for longer than one year.
• Short-term capital gain: This includes the profits of an item you sold that you owned for one year or less. Short-term capital gains tax rates are the same as your ordinary income tax rate.

How much tax do I owe on my long-term gain?

As a taxpayer, you can pay anywhere from 0% to 20% tax on your long-term capital gain, depending on your income level and tax filing status. Additionally, capital gains are subject to the net investment income tax (NIIT) of 3.8% when the income is above certain amounts.

Long-term capital gains tax rates 2025

Long-term capital gains rates are applied based on ordinary income amounts. The brackets for 2025 for each filing status are:

Tax rate	Single	Married filing jointly	Married filing separately	Head of household
0%	$0 to $48,350	$0 to $96,700	$0 to $48,350	$0 to $64,750
15%	$48,351 to $533,400	$96,701 to $600,050	$48,351 to $300,000	$64,751 to $566,700
20%	$533,401 or more	$600,051 or more	$300,001 or more	$566,701 or more

Are there exceptions to paying taxes on long-term gains?

• You may not have to pay tax on a gain of up to $250,000 from the sale of your home. That rule applies if you have owned and lived in the house for at least two of the last five years or if you meet certain exceptions.
• If you’re married, you can exclude up to $500,000 in gain from the sale of your home if you meet the IRS requirements.

Do I have to pay the additional tax on net investment income?

You may have to pay an additional 3.8% tax on net investment income.

This tax has to be paid if your modified adjusted gross income (MAGI) is $200,000 or more ($250,000 if filing jointly or qualifying surviving spouse, and $125,000 if married filing separately). You can reduce your investment income for that tax by deducting investment interest expenses, advisory and brokerage fees, rental and royalty expenses, and state and local income taxes allocated to your investment income.

The 3.8% tax applies to investment income, such as interest, dividends, capital gains, rental income, and royalties. It’s paid in addition to the tax you already pay on investment income.

What should you know before you sell?

If you’re considering selling assets, such as stock, it’s best to plan ahead. A little planning now can save you a lot of capital gains tax when you file your return.

Consider these options**:**

• Don’t sell before the profit qualifies as long-term
• Don’t hang on to losing investments just to avoid taking a loss
• There are worse things than owing taxes 
• Give stock that has gone up in value to charity
• Don’t sell all at once 
• Take the proceeds as an installment sale
• Plan for a 1031 exchange
• Look for other ways to reduce your income tax bracket in the year of the sale
• Buy and hold

This article is for informational purposes only and not legal or financial advice.

All TaxAct offers, products and services are subject to applicable terms and conditions.