capital gains on stock sales

[addicted2]

I sold a substantial holding in Nvidia stock last year and my reading of the rules is that if my wife and my taxable income is under approximately $95000 I owe no capital gains taxes on the sale. My question is whether or not the sale proceeds count as part of my taxable income or is that considered separate from my taxable income? If the stock proceeds are not part of my ordinary taxable income, that suggests I own nothing on the sale and while that would be nice, I find it difficult to believe.

[Bsch4477]

Yes, it increases your taxable income. 

[addicted2]

So my taxable income goes from $75,000 to over $1,500,000? Ouch.

[DaveF1006]

To clarify, Is the sale of your Nividia stock factored into the $95000 amount you mentioned earlier?

@addicted2 

[addicted2]

I don't think so, in other words my taxable income if I had not sold the stock would have been around $75000, mostly Social Security. The stock sale proceeds were almost $1.8 million. My question was basically if $1.8 million was now going to be my taxable income.

[DaveF1006]

Is the 1.8 million the gross proceeds or is the price you paid for the stocks factored in.? Also did you own the stock more than one year? Please give the specifics so I can give you a complete answer to this.

[DaveF1006]

Yes, you will owe capital gains on this distribution. How much capital gains depends on two things.

• How long you had the stocks. If longer than 1 year, long-term capital gains rate will apply.
• You may have cost basis in the stocks.  The proceeds minus your cost basis will determine your capital gain.

For an example, if $1.8M was your actual gain for the year and you are eligible to take the long-term capital gains rate, here is how this is taxed.

2025 Long-Term Capital Gains Tax Brackets (Based on Taxable Income) 

• 0% Rate: Up to $48,350 (Single), $96,700 (Married Filing Jointly).
• 15% Rate: $48,351 - $533,400 (Single), $96,701 - $600,050 (Married Filing Jointly).
• 20% Rate: Over $533,400 (Single), Over $600,050 (Married Filing Jointly). 

The first $96,200 is taxed at zero percent. From $96,701-$600,050 at 15%.  The remaining is taxed at 20% above $600,050. This analysis may be different, but we are using $1.8 as a hypothetical analysis.

If you owned the stocks for less than a year, your gain is taxed at your ordinary tax rate.

@addicted2 

[Mike9241]

The $1.8 would be reduced by what you paid for the stock. Only the gain or loss is taken into account for income tax purposes.