If married filing jointly, and have an income less than $91,000, are capital gains tax owed on the excess profit above the $500,000 exemption on a house sale?

You might owe some tax on the gain. It depends on the exact amount of the gain and the exact amount of your other income and deductions. For 2025, married filing jointly, the 15% tax rate for long-term capital gain starts at a total taxable income of $96,700. Total taxable income includes the capital gain.

Note that this applies to taxable income, not total income or adjusted gross income (AGI). Taxable income is basically total income minus adjustments and either itemized deductions or the standard deduction.

 

For MFJ in 2025, the 12% income bracket goes up to $96,950 and the standard deduction of $30,000.  To determine capital gains, the total income stacks.  In other words, suppose your income is $90,000.  Subtract the standard deduction, your taxable income is $60,000.  Then add $100,000 of capital gains.  Now your total taxable income is $160,000 which is in the 15% bracket for capital gains.   The first $36,950 of capital gains is tax-free and the remainder is taxed at 15%.  

 

It looks something like this.