You can get an idea from the IRS of what your tax bracket might be for 2022 or 2023.įor the 2022 tax year (i.e., the taxes most individuals will file by April 17, 2023), long-term capital gains rates are either 0%, 15%, or 20%. Your short-term capital gains are taxed at the same rate as your marginal tax rate (tax bracket). If you held your shares for more than one year before selling them, the profits will be taxed at the lower long-term capital gains rate.īoth short-term and long-term capital gains tax rates are determined by your overall taxable income. Generally speaking, if you held your shares for one year or less, then profits from the sale will be taxed as short-term capital gains. Short-term and long-term capital gains taxes Please read our Privacy Policy and Terms of Use. The Motley Fool respects your privacy and strive to be transparent about our data collection practices. Other products and services that we think might interest you. The taxes you owe depend on your total income for the year and the length of time you held the shares.īy submitting your email address, you consent to us keeping you informed about updates to our website and about Now that you've determined your profits, you can calculate the tax you'll have to pay. So in this example, you'd pay taxes on the $40 in profits, not the entire $150 total sale price. If you later sold all the stock for $150 total, paying another $5 in transaction fees for the sale, here's how you'd calculate your profits:Ĭost basis = $100 (10 shares $10 each) + $10 (purchase and sale fees $5 each) = $110 profits = $150 - $110 = $40 Let's say you bought 10 shares of stock in Company X for $10 each and paid $5 in transaction fees for the purchase. Profits = Proceeds from sale-cost basis Example of how to calculate profits from a stock sale To determine profits, take your total proceeds and subtract your cost basis (also known as your tax basis), which consists of the amount you paid to buy the stock in the first place, plus any commissions or fees you paid to buy and sell the shares.Ĭost basis = Price paid for stock + Commission and fees When you sell stock, you're responsible for paying taxes only on the profits - not on the entire sale. How to calculate profits from selling stock Here's what you need to know about selling stock and the taxes you may have to pay. A capital gain is any profit from the sale of a stock, and it has unique tax implications.
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