Question 1

How are short-term capital gains taxed?

Accepted Answer

Short-term capital gains (on assets held one year or less) are taxed as ordinary income at your marginal tax rate, which ranges from 10% to 37% depending on your total taxable income and filing status. There is no preferential rate for short-term gains.

Question 2

What is the difference between short-term and long-term capital gains?

Accepted Answer

The distinction is based on how long you held the asset. Assets held for one year or less generate short-term gains (taxed as ordinary income). Assets held for more than one year generate long-term gains (taxed at preferential rates of 0%, 15%, or 20%).

Question 3

Do short-term capital gains affect the Net Investment Income Tax?

Accepted Answer

Yes. Short-term capital gains are included in net investment income for purposes of the 3.8% NIIT. The NIIT applies to the lesser of your net investment income or the amount your MAGI exceeds $200,000 (single) or $250,000 (married filing jointly).

Question 4

Can I offset short-term gains with losses?

Accepted Answer

Yes. Short-term capital losses first offset short-term gains. If you have excess short-term losses, they can offset long-term gains. If total losses exceed total gains, you can deduct up to $3,000 ($1,500 MFS) against ordinary income and carry forward the rest.

Step	Amount
Other Income	$75,000
+ Short-Term Capital Gains	$25,000
- Deduction	$15,000
= Taxable Income	$85,000
Federal Tax	$5,500
NIIT	$0
Total Tax	$5,500

Short-Term Capital Gains Tax Calculator (2025)

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