Your gain on the sale of the house is the selling price minus your basis. The selling price is probably not the same as the amount of money you received. Paying off a mortgage is not taken into consideration in determining the gain.
If you purchased the house, your basis is the amount you paid for it, plus the cost of any improvements that you made. If you acquired the house in some way other than by buying it, post more information.
If you owned the house for more than a year the gain is long-term, whether or not you qualify for the exclusion of gain that xmasbaby0 described. On your federal tax return, long-term gain is taxed at lower rates than ordinary income. The actual rate depends on the taxable amount of the gain, the amount of your other taxable income, and your filing status. Most states do not have lower state tax rates for long-term gain.
