7a — Capital Gain or Loss Updated for tax year 2025

What this line means

Your net capital gain or loss from the sale of stocks, bonds, mutual funds, real estate, and other capital assets. This number comes from Schedule D or, if you qualify, directly from the Qualified Dividends and Capital Gain Tax Worksheet. A positive number is a gain that increases your income. A negative number is a loss, but only up to $3,000 per year can be deducted.

Does this apply to you?

• You sold stocks, bonds, or mutual fund shares during the year
• You sold a home or other real estate
• You received capital gain distributions from a mutual fund (1099-DIV Box 2a)
• You sold cryptocurrency, NFTs, or other digital assets
• You had a casualty or theft loss on investment property

Easy to overlook

The $3,000 capital loss deduction limit If your net capital losses exceed $3,000 ($1,500 if married filing separately), you can only deduct $3,000 against other income this year. The excess carries forward to future years indefinitely. Filers sometimes report their entire loss amount on this line, claiming a larger deduction than allowed. The carryover is valuable — but only if you track it and use it. ¹ [SOURCE: IRS Publication 550 — capital loss limitation]

Long-term capital gains rate thresholds determine your actual tax Long-term capital gains (assets held over one year) are taxed at 0%, 15%, or 20% depending on your taxable income. For 2025, the 0% rate applies up to $48,350 (single) or $96,700 (MFJ). The 15% rate applies up to $533,400 (single) or $600,050 (MFJ). Above those thresholds, the 20% rate applies. Many filers in lower tax brackets pay zero capital gains tax without realizing it. ² [SOURCE: IRS Topic 409 — Capital Gains and Losses]

Mutual fund capital gain distributions count even if you did not sell Your mutual fund can distribute capital gains to you even though you did not sell any shares yourself. These gains appear on your 1099-DIV Box 2a and are reported on this line (or Schedule D). Many filers ignore these distributions because they never made a sale, but the fund’s internal trading generated gains passed through to you. ³ [SOURCE: CP2000 pattern — unreported stock sales from broker 1099-B]

Watch out for this

Not reporting stock sales because you assume your broker reported them. The IRS receives a copy of every 1099-B, and if you do not report the sales on your return, the automated matching system flags the missing income. Even if the sale resulted in a loss, you must report it to claim the deduction and avoid a CP2000 notice.

Related lines on your return

• Schedule D — Form 1040 — Detailed calculation of capital gains and losses
• Line 3a — Form 1040 — Qualified dividends; taxed at the same preferential rates as long-term capital gains
• Line 16 — Form 1040 — Tax; long-term capital gains use a separate (lower) tax rate schedule