Sold in under a year? See the short-term tax bite.
Profits on stocks held a year or less are taxed as ordinary income. See what flipping a position could cost — and what waiting could save.
Why it matters: Flipping a stock on Robinhood or Fidelity? Gains held under a year are taxed at your ordinary income rate — often far more than long-term rates.
Example calculation
Say you flipped a stock on Robinhood: you bought 50 shares at $40 ($2,000) and sold three months later at $60 ($3,000) for a $1,000 short-term gain. You're single with $75,000 of other income, putting you in the 22% bracket.
Because you held the shares under a year, the $1,000 is taxed as ordinary income: about $220 in estimated federal tax. Had you waited past the one-year mark, that same $1,000 gain would likely be taxed at the 15% long-term rate — roughly $150.
What are short-term capital gains?
A short-term capital gain is the profit you make when you sell an investment you've held for one year or less. Unlike long-term gains, which get special low rates, short-term gains are taxed as ordinary income — the same rates that apply to your paycheck. For 2024, those federal rates range from 10% to 37%. This calculator preselects the short-term holding period and shows your estimated federal tax and after-tax proceeds.
How short-term gains are taxed as ordinary income
Short-term gains are added on top of your other taxable income. That means a large short-term profit can push part of your income into a higher marginal bracket. For example, if you're near the top of the 24% bracket, a big short-term gain could be taxed partly at 24% and partly at 32%. The calculator handles this by computing the difference between your tax with and without the gain.
Short-term gains on Robinhood, Fidelity, and day trading
Every taxable brokerage account — Robinhood, Fidelity, Schwab, E*TRADE, Webull and others — reports your realized gains to the IRS on Form 1099-B. There is no special "app" loophole: if you buy and sell within a year at a profit, it's a short-term gain taxed as ordinary income.
- Stock flipping: buying a hot stock and selling weeks later locks in short-term treatment.
- Day trading: nearly all active-trading profits are short-term. Only a small number of people qualify for the IRS's strict "trader tax status."
- Options and swing trades: short holding periods generally mean ordinary-income tax on the gains.
How to reduce short-term capital gains tax
The most reliable way to lower the rate is simply to hold for more than a year so the gain becomes long-term. Other common, general approaches include harvesting capital losses to offset gains and doing your trading inside tax-advantaged accounts such as IRAs and 401(k)s, where trades aren't taxed each year. This is general education, not personalized advice.
Watch out for the wash sale rule
If you sell at a loss and buy the same or a substantially identical security within 30 days before or after, the IRS disallows that loss for the year (it adjusts your basis instead). Active traders can accidentally trigger wash sales often, so track them carefully. This calculator does not model wash sales.
Short-term vs long-term: the bottom line
Holding an extra day past the one-year mark can move a gain from ordinary rates (up to 37%) to long-term rates (0–20%). Before you sell something you've held close to a year, compare both outcomes with our long-term capital gains calculator and the general capital gains tax calculator.
Keep going — related calculators
Answer your next investing question in under a minute.
Should I sell now or wait for long-term?
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What's my long-term capital gains rate?
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Trading in multiple accounts?
Your broker may not catch wash sales across Robinhood, Fidelity, Schwab, Webull, IRAs, and options trades. Upload CSVs and check possible matches locally.
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Frequently asked questions
Educational use only — not financial advice
StockLeo is for educational purposes only and does not provide financial, investment, legal, or tax advice. Calculations are estimates and may not reflect your full tax or financial situation. Consult a qualified professional before making financial decisions.