Selling Stock: Net After-Tax Return at Each Income Level

A single filer realizing a $200,000 long-term gain in 2026 keeps a different amount of money depending on one variable most sellers underweight: not the gain itself, but the income stacked beneath it. At $180,000 of other taxable income, that gain faces a 15% federal rate plus the 3.8% net investment income tax. Push other income to $560,000, and the marginal rate on the same gain climbs to 23.8% federal before a single dollar of state tax enters the calculation. The dollar spread between those two outcomes exceeds $17,000 on identical stock.

This analysis models the net after-tax return on a stock sale across income levels for the 2026 tax year, using the inflation-adjusted thresholds the IRS published under Revenue Procedure 2025-32. The focus is the $150k+ household, where long-term capital gains (LTCG) almost always land in the 15% or 20% federal band and the 3.8% surcharge is frequently in play. Short-term capital gains (STCG) are modeled alongside to quantify the holding-period penalty.

The numbers that decide your net

Three federal layers stack on a stock sale. The base LTCG rate (0%, 15%, or 20%) is set by where your taxable income falls. NIIT adds a flat 3.8% once modified adjusted gross income clears a fixed threshold. State tax, where it exists, sits on top of both. For the $150k+ household, the first layer is rarely 0% and the second layer is almost always triggered.

Source: IRS Revenue Procedure 2025-32 (2026 inflation adjustments); IRC §1411 (NIIT); Tax Foundation / SmartAsset state rate data, 2026.

Note the asymmetry built into the system. The LTCG brackets shift up with inflation every year — the single-filer 20% threshold rose to $545,500 for 2026. The NIIT threshold has not moved since the Affordable Care Act set it at $200,000 single / $250,000 MFJ in 2013. Thirteen years of frozen thresholds mean the 3.8% surcharge now reaches households it was never calibrated to touch. For anyone earning $150k+, NIIT is no longer a tax on the wealthy; it is a near-certainty on investment income. The mechanics of when the 3.8% surcharge kicks in deserve their own attention if your income sits near the line.

Long-term gains by income level

Model a clean $100,000 long-term gain on stock — cost basis $100,000, sale price $200,000, held more than one year. The federal rate depends entirely on the filer’s other taxable income, because the gain stacks on top of it. Here is the result across four single-filer income scenarios, before state tax.

*At $40,000 other income, part of the gain fills the remaining 0% band before reaching 15%; the table shows the simplified 15% outcome for comparison. NIIT (3.8%) applies to the lesser of net investment income or MAGI above $200,000, so the $180,000 row is taxed at 3.8% only on the ~$70,000 of gain that pushes MAGI past the threshold. Source: IRS Rev. Proc. 2025-32; IRC §1411.

The $180,000 row is where most coverage gets the math wrong. NIIT does not apply to the entire gain the moment income crosses $200,000. It applies to the portion of net investment income that sits above the threshold. A filer with $180,000 of wages and a $100,000 gain has MAGI of $280,000 — so $80,000 clears the line, and 3.8% of that $80,000 is roughly $3,040 in NIIT, not 3.8% of the full $100,000. That distinction shrinks the effective rate from a feared 18.8% to an actual ~17.7% in this case. The closer your base income sits to $200,000, the more the surcharge gets diluted across the gain.

The short-term penalty, quantified

Hold the same stock for 364 days instead of 366, and the gain converts from long-term to short-term — taxed as ordinary income at rates running from 10% to 37% in 2026. For the $150k+ household, that means the gain is taxed at the marginal ordinary bracket, which for high earners is dramatically higher than the LTCG rate sitting beside it.

Ordinary brackets: 32% begins $201,775, 35% begins $256,225, 37% begins $640,600 (single). STCG figures include 3.8% NIIT. Source: IRS Rev. Proc. 2025-32; IRC §1411.

At $300,000 of other income, waiting two extra days to cross the one-year mark saves $20,000 on a $100,000 gain. That is a 20% swing in net proceeds determined by the calendar alone. The full economics of the holding-period decision get more nuanced once you weigh market risk against tax savings, but the raw tax delta is rarely smaller than $15,000 per $100,000 of gain at these income levels. Anyone sitting on a large unrealized position approaching the twelve-month line is making a five-figure decision whether they frame it that way or not.

State tax: the variable that dwarfs the rest

Federal rates are uniform. State rates are not, and for a large gain the state line on the return often exceeds the federal one. Most states tax capital gains as ordinary income — California reaches 13.3%, with a 1% mental-health surcharge above $1 million pushing the effective top to 14.4%. Nine states impose no tax on gains at all. The gap between a California resident and a Florida resident on a $1 million gain is roughly $133,000.

*Combined = 20% federal LTCG + 3.8% NIIT + state rate, top bracket. State deductibility of federal tax and itemized SALT caps not modeled. Source: IRS Rev. Proc. 2025-32; Tax Foundation / SmartAsset state data, 2026; California Franchise Tax Board guidance, January 2026.

A California resident in the top bracket keeps $314,500 of a $500,000 gain. A Florida resident keeps $381,000 — a difference of $66,500 on the identical sale. This is the arithmetic behind founders and pre-liquidity-event investors establishing residency in zero-tax states; the reasons California’s rate sits highest are structural, not accidental. For a household weighing a major sale, residency is frequently the single largest controllable input into the net.

Finluxy After-Tax Gain Rate

The headline gain percentage on a stock sale overstates what reaches your account. The Finluxy After-Tax Gain Rate strips out federal LTCG, NIIT, and state tax to show the return on your original cost basis after the tax haircut. Calculation: net gain after all applicable taxes ÷ original cost basis × 100, compared against the pre-tax gain rate.

Model a stock bought at $100,000 (cost basis) and sold at $300,000 after three years — a $200,000 long-term gain, a 200% pre-tax gain rate. Below, the same trade resolved in three tax environments at top-bracket income.

Combined rate = 20% federal LTCG + 3.8% NIIT + state top rate. Source: IRS Rev. Proc. 2025-32; IRC §1411; Tax Foundation / SmartAsset state data, 2026.

A 200% pre-tax gain delivers a 125.8% after-tax gain rate to a top-bracket Californian — the tax haircut consumes 74.2 percentage points of return. The same trade hands a Florida resident 152.4%. The investment performed identically in every column; geography and the surcharge rewrote the outcome.

What tax-loss harvesting actually recovers

Losses realized in a taxable account offset gains dollar-for-dollar, and tax-loss harvesting converts a paper loss into a tax asset. The value is the loss harvested multiplied by the rate it offsets. A $50,000 long-term loss applied against a $50,000 gain taxed at the 23.8% combined federal rate saves $11,900. Applied against a short-term gain at a 37% ordinary bracket plus NIIT, the same $50,000 loss saves $20,400 — harvesting is worth more when it shields higher-rate income.

Two constraints govern the strategy. The wash sale rule disallows the loss if you buy the same or a substantially identical security within 30 days before or after the sale, creating a 61-day window per IRS Publication 550. And losses exceeding gains offset only $3,000 of ordinary income per year, with the remainder carrying forward indefinitely. For a household harvesting against a large concentrated gain, the dollar mechanics of loss harvesting reward planning the offset against the highest-taxed gains first.

Methodology

What this means for the $150k+ household

At this income level, three thresholds do most of the work, and none of them is the gain amount. The NIIT line at $200,000 MAGI is effectively crossed by any household with meaningful wages and investment income, adding 3.8% that most planning tools quietly assume away. The 20% LTCG band at $545,500 single / $613,700 MFJ separates the 15% world from the 23.8% world, and a large single-year gain can vault a household across it. State residency, finally, swings the net by more than federal bracket placement does — the California-to-Florida gap on a $500,000 gain is $66,500.

The practical levers are timing and sequencing. Realizing a gain in a year when other income is lower keeps more of it in the 15% band and dilutes the NIIT bite. Crossing the one-year holding mark before selling converts a 32%–37% ordinary rate into a 15%–20% preferential rate, worth $17,000–$20,000 per $100,000 of gain at these brackets. Harvesting losses against the highest-rate gains, not the lowest, maximizes recovery. For households contemplating a sale large enough to change residency-planning or multi-year timing decisions, the figures here define the stakes — and the specific interaction of your wages, gain size, and state of residence is where a tax professional earns their fee, because the $66,500 and $20,000 swings shown above are not hypothetical for a seven-figure liquidity event.