Foreign shares are taxed like any other stock
There is no separate allowance for gains on foreign shares in the United States, because U.S. persons are taxed on worldwide income. A gain on a share listed in Tokyo, London or Seoul is reported on the same Schedule D and Form 8949 as a gain on a domestic share, with the same rates. Where foreign tax has been withheld, relief comes from the foreign tax credit on Form 1116 rather than from any exclusion.
What actually changes your rate is the holding period. A position held more than one year is a long-term gain taxed at a preferential rate that steps up with taxable income; a position held a year or less is a short-term gain taxed at your ordinary marginal rate. On top of either, the net investment income tax applies to investment income once modified adjusted gross income passes a threshold that is fixed in statute and not indexed.
Rate breakpoints are indexed annually and are shown here as editable fields on a 2026 basis; confirm current figures in the Form 1040 instructions. The calculation applies one rate to the whole gain based on total taxable income, which is a simplification of the stacking rules used on the return.
This is an estimate, not a filing calculation. Wash sales, lot selection, currency gain on the underlying transaction, PFIC rules for foreign funds, state tax and the foreign tax credit all change the result. Confirm with a CPA.
Frequently asked questions
No. Worldwide income is taxable, so the gain is reported the same way as a domestic sale. Foreign tax withheld may be recoverable as a credit instead.
It is a separate surtax on investment income once modified adjusted gross income passes a statutory threshold. The thresholds are not indexed, so more filers reach them over time.