How Much Is the Capital Gains On Stocks?

Posted Oct 23, 2022

ipad-pencil-stocks-portfolio-IS-1171268236Before investing in stocks, it’s important to understand how capital gains taxes work. These taxes are applied to the sale of assets like stocks and bonds as well as physical investments like real estate. Capital gains taxes will affect your total returns, so you’ll need to keep them in mind when deciding which stocks to buy or sell. Here’s everything you need to know about capital gains on stocks in 2022.  

What are short-term capital gains? 

The gains on an investment that is sold within a year of its initial purchase are considered short-term capital gains. Short-term capital gains taxes will apply to day traders and other active investors. These short-term capital gains are taxed at the same rate and use the same brackets as other forms of income.  

What are long-term capital gains? 

Long-term capital gains taxes are applied to stocks that are held for more than one year before their sale. These taxes are almost always lower than short-term capital gains taxes, which incentivizes investors to hold stocks for a longer period of time.  

Long-term capital gains use different brackets than standard income taxes. These capital gains are taxed at rates of 0%, 15%, or 20%, depending on your income. This is a change for the 2021-2022 tax year. In previous years, long-term capital gains brackets aligned with the brackets for overall income. 

Long-term capital gains brackets for 2022 are as follows:  

Tax Rate 

Filing Single 

Married Filing Joint Returns 

Married Filing Separately 

Head Of Household 







$41,675 – $459,750 

$83,350 – $517,200 

$41,675 – $258,600 

$55,800 – $488,500 


Over $459,750 

Over $517,200 

Over $258,600 

Over $488,500 

How do capital gains taxes on stocks work? 

Capital gains taxes are applied the year a stock is sold. This means you won’t pay capital gains taxes until after you sell your investments. These taxes are applied to the profit you make from the sale. This means that if you buy a set of shares for $100,000 and sell them for $120,000, you would pay capital gains taxes on the $20,000 return you receive from the investment.  

If you lose money on a stock sale, you won’t need to pay capital gains taxes. In fact, if your capital losses are higher than your capital gains, you will qualify for a tax deduction of up to $3,000 in losses.  

This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor.  

Realized does not provide tax or legal advice. This material is not a substitute for seeking the advice of a qualified professional for your individual situation. 

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