rjs
Level 15
Level 15

Get your taxes done using TurboTax

The tax rate on long-term capital gain is based on taxable income, not AGI. And it is based on total taxable income, including the capital gain. It also depends on your filing status, which you didn't specify. Since you said "we" I'll assume you are married filing jointly.


For 2020, if you are married filing jointly and you are both under 65 and not blind, your standard deduction will be $24,800. If your AGI, excluding the capital gain, is $60,000, and you take the standard deduction, your taxable ordinary income will be $35,200.


The long-term gain is "stacked" on top of your ordinary income for calculating the tax rate. So if you stack a $50,000 gain on top of $35,200 of ordinary taxable income, your total taxable income will be $85,200. For 2020, the top of the 0% bracket for long-term capital gain is $80,000. So your income straddles the 0% and 15% brackets. The first $44,800 of the gain will be taxed at 0%. Any gain over that amount ($5,200 in this example) will fall in the 15% bracket.