Capital gains tax is the tax on the profit when you sell an asset that has increased in value. It's important to understand how it works:

• Short-term vs. Long-term: Assets held for one year or less are subject to short-term capital gains tax, which is taxed as ordinary income. Assets held for more than a year are subject to long-term capital gains tax, which usually has lower rates.
• Tax Rates: For 2023, long-term capital gains tax rates are 0%, 15%, or 20% depending on your taxable income and filing status.
• State Taxes: Some states also tax capital gains, often at the same rate as ordinary income.
• Offsetting Gains: Capital losses can be used to offset capital gains, potentially reducing your tax liability.

This calculator provides a simplified estimate and does not account for all possible scenarios or tax implications. For accurate tax planning, consult with a qualified tax professional.