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Step-Up in Basis Calculator

Enter the original cost basis, date-of-death value, and expected sale price to see how much capital gains tax the step-up saves your heirs.

Details

Original purchase price / basis ($)

Value at date of death ($)

Expected sale price ($)

Capital gains rate

Results

Capital gains tax saved -

Stepped-up basis -

Heir's taxable gain -

Tax without step-up -

Tax with step-up -

Uses the rate you select above; actual returns may differ.

By Priya Raman, Contributing Writer, Policy & Regulation
Updated 2026-07-08

A quick example first

Picture a house your parents bought decades ago for $200,000. It's worth $800,000 the day they pass it to you, and you sell it a few months later for $820,000. Without the step-up, you would owe capital gains tax on a $600,000 gain, the full run-up since the original purchase. With it, your basis becomes the $800,000 date-of-death value, so the taxable gain shrinks to $20,000. That difference is the default example loaded into the calculator above.

What the calculator just did

It ran that comparison twice: once using the original purchase price as the basis (what a lifetime gift would carry), and once using the date-of-death value (what an inheritance receives automatically). The gap between the two "tax with" and "tax without" figures is the amount the step-up saved. Change any of the three dollar fields and the comparison updates immediately.

Rates this calculator uses

Long-term capital gains rates available above
Selectable rate	Typical use case
0%	Lower-income sellers in the bottom long-term capital gains bracket
15%	Most sellers, the standard long-term rate
20%	Higher-income sellers at the top long-term bracket

Only lifetime appreciation is erased: gains that built up while the original owner held the asset disappear for capital gains purposes at inheritance. Growth after that date is taxable as normal.

More free tools

See the full federal and state estate tax picture, or check what the same dollars would owe in gift tax if given away today instead.

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Why holding beats gifting, tax-wise

Give an appreciated asset away during life and the recipient inherits your original cost basis, gain and all. Hold the same asset until death and the basis resets to current value, erasing that gain entirely. This is the single biggest reason advisors often tell clients to gift cash or already-low-basis assets, and to hold highly appreciated property until death instead. The gift tax calculator shows the other side of that tradeoff: what gifting costs against your lifetime exemption.

The step-up applies asset by asset, at fair market value on the date of death (or an alternate valuation date the executor can elect in limited cases). It has nothing to do with whether the estate owes any estate tax; even estates far under the federal exemption still get the basis reset.

Good to know

Straight answers about the basis step-up

Does the step-up apply to retirement accounts like IRAs?

No. Traditional IRAs and 401(k)s pass to heirs at their existing value and withdrawals are taxed as ordinary income; there is no basis to step up because contributions were never taxed as capital gains property.

What happens if the asset lost value before death?

The basis still resets to the lower date-of-death value. Heirs cannot use the original, higher purchase price to claim a bigger loss; the reset works in both directions.

Do jointly owned assets get a full step-up?

It depends on ownership structure and state law. Community property held by a married couple typically gets a full step-up on both halves at the first death, while ordinary joint tenancy usually steps up only the deceased owner's share.

Is this tax advice?

No, it is an educational estimate. A CPA can confirm how basis rules apply to a specific inherited asset.