Capital Gains Tax Rates 2026: US Federal Rates & Brackets

You sold some stock at a profit, or maybe a rental property, and now you want to know what you owe. The answer depends on how long you held the asset, your filing status, and your taxable income.

For 2026, most long-term gains are taxed federally at 0%, 15%, or 20%. Short-term gains are taxed like ordinary income. This guide gives you the official 2026 thresholds, worked examples with real math, and the extra rules (the 3.8% surtax, special rates, loss limits) that catch people off guard.

What Are the US Capital Gains Tax Rates for 2026?

Long-term capital gains (assets held more than one year) are generally taxed at 0%, 15%, or 20%, depending on taxable income and filing status. Short-term capital gains (assets held one year or less) are taxed at your ordinary income rate, which ranges from 10% to 37%.

Here are the 2026 long-term thresholds from IRS Revenue Procedure 2025-32:

These thresholds apply to taxable income, not gross income. They are for tax year 2026, and most people file those returns in early 2027.

High earners may also owe a separate 3.8% Net Investment Income Tax, covered below. This article is general education, not tax advice. See our disclaimer for details.

What Is a Capital Gain?

A capital gain is the profit you make when you sell a capital asset for more than your adjusted basis. The IRS defines capital assets broadly. Stocks, bonds, ETFs, mutual fund shares, cryptocurrency, real estate, and collectibles generally qualify.

Here is the formula:

Capital gain = sale price − adjusted basis

Your adjusted basis is usually what you paid, plus certain costs such as commissions or improvements, minus things like depreciation. If you bought shares for $10,000 and sold them for $14,000, you have a $4,000 gain.

Realized vs. Unrealized Gains

• Unrealized gain: Your investment is worth more than you paid, but you haven't sold it. No capital gains tax is due.
• Realized gain: You sold, so the gain counts for tax purposes.

This matters for planning. You control when most gains become taxable, which is why timing is such a powerful lever.

Why Capital Gains Are Taxed Differently From Wages

Congress taxes long-term investment profits at lower rates than wages. The usual reasoning is to encourage long-term investing and reduce the penalty on gains that build up over many years. Wages and short-term gains get no such discount.

If you want a refresher on the vocabulary used in this guide, our essential tax terms glossary covers the basics.

Short-Term vs. Long-Term Capital Gains: The Holding Period Rule

The holding period decides which rate applies. Per IRS Topic No. 409, an asset generally has to be held for more than one year to qualify for long-term treatment.

The holding period starts the day after you acquire the asset and includes the day you sell. Selling on day 365 versus day 366 can change your tax bill by thousands of dollars.

A Quick Example of What Waiting Saves

Imagine you are a single filer with taxable income of $150,000 before a $25,000 gain. Your ordinary rate is 24%.

• If the gain is short-term: $25,000 × 24% = $6,000
• If the gain is long-term: The rate is 15% for most of it, so $25,000 × 15% = $3,750

Waiting past the one-year mark saves $2,250 in this case. Hold off on selling an investment that is close to the one-year line only if that fits your broader financial plan, since tax savings alone shouldn't override sound investing.

2026 Short-Term Capital Gains Tax Rates (Ordinary Income Brackets)

Short-term gains are added to your other income and taxed at your marginal rate. The seven rates stay the same for 2026, and the One Big Beautiful Bill Act made the lower individual rate structure permanent rather than letting it expire after 2025.

Here are the 2026 ordinary income brackets for the two most common filing statuses:

Confirm these against IRS Revenue Procedure 2025-32 or the Tax Foundation's 2026 bracket tables before filing.

Marginal Rate vs. Effective Rate

Your marginal rate applies only to the slice of income in that bracket. Your effective rate is your total tax divided by total income. A short-term gain can push part of your income into a higher bracket, but it doesn't raise the rate on income already taxed.

Not sure where you land? Estimate your taxable income with the Income Tax Calculator, then see which bracket your gain stacks into. For background on how inflation moves brackets, read our explainer on bracket creep.

2026 Long-Term Capital Gains Tax Brackets by Filing Status

Now the preferential rates. The three long-term rates did not change for 2026. Only the dollar thresholds moved up with inflation.

Single Filers

• 0%: Taxable income up to $49,450
• 15%: $49,451 to $545,500
• 20%: Over $545,500

Married Filing Jointly

• 0%: Taxable income up to $98,900
• 15%: $98,901 to $613,700
• 20%: Over $613,700

Head of Household

• 0%: Taxable income up to $66,200
• 15%: $66,201 to $579,600
• 20%: Over $579,600

Married Filing Separately

• 0%: Taxable income up to $49,450
• 15%: $49,451 to $306,850
• 20%: Over $306,850

How Filing Status Changes Your Rate

Filing status shifts the thresholds, sometimes dramatically. A married couple filing jointly gets a 0% ceiling of $98,900, exactly double the single figure. Married filing separately mirrors the single thresholds at the bottom but hits the 20% rate far earlier, at $306,850.

Head of household sits in between. If you qualify, it can put more of your gain in the 0% zone than single status would.

How the Brackets Actually Work: Gains Stack on Top of Ordinary Income

This is the point most people miss. Long-term gains don't get their own separate bracket starting at zero. Your ordinary income fills the brackets first, and your long-term gains stack on top.

So a single filer with $40,000 of ordinary taxable income and a $20,000 gain doesn't pay 0% on the whole gain. Only the part that fits under the $49,450 ceiling is taxed at 0%.

Worked Example 1: Gain Split Between 0% and 15% (Single)

• Ordinary taxable income: $40,000
• Long-term gain: $20,000
• Room left under the 0% ceiling: $49,450 − $40,000 = $9,450
• Portion taxed at 0%: $9,450
• Portion taxed at 15%: $20,000 − $9,450 = $10,550
• Tax on the gain: $10,550 × 15% = $1,582.50

Worked Example 2: Married Couple Filing Jointly

• Ordinary taxable income: $90,000
• Long-term gain: $30,000
• Room under the 0% ceiling: $98,900 − $90,000 = $8,900
• Taxed at 0%: $8,900
• Taxed at 15%: $21,100
• Tax on the gain: $21,100 × 15% = $3,165

Worked Example 3: Gain Crossing Into the 20% Bracket (Single)

• Ordinary taxable income: $520,000
• Long-term gain: $60,000
• Total taxable income: $580,000
• Room under the 15% ceiling: $545,500 − $520,000 = $25,500
• Taxed at 15%: $25,500, which is $3,825
• Taxed at 20%: $34,500, which is $6,900
• Federal tax on the gain: $10,725

If the same person owes the 3.8% NIIT on this gain, add $2,280. Assuming MAGI is well above $200,000 and the gain is their only net investment income, the total is $13,005.

How NIIT Is Calculated

You generally owe 3.8% on the lesser of:

1. Your net investment income, or
2. The amount by which your MAGI exceeds the threshold

Why the Top Rate Is Really 23.8%

A taxpayer in the 20% bracket who is also subject to NIIT pays a combined federal rate of 23.8% on covered gains. That's before any state tax. Report NIIT on Form 8960.

NIIT is separate from the 0/15/20 structure, so don't treat it as part of the capital gains rate itself.

Special Capital Gains Rates That Aren't 0%, 15%, or 20%

Some gains fall outside the standard schedule. IRS Topic No. 409 lists the main exceptions:

• Collectibles: Art, antiques, coins, and similar items held long-term can be taxed at a maximum of 28%.
• Unrecaptured Section 1250 gain: Depreciation previously claimed on real estate can be taxed at up to 25%.
• Qualified small business stock (QSBS): The taxable portion of the gain can be taxed at up to 28%, though many holders qualify for a partial or full exclusion under Section 1202.

These rules are technical. If you hold any of these asset types, read the relevant IRS guidance or consult a tax professional before selling.

Capital Losses: How They Reduce Your Tax Bill

Not every sale is a winner. The tax code lets losses offset gains, which can lower your bill.

The Netting Process

1. Offset short-term gains with short-term losses.
2. Offset long-term gains with long-term losses.
3. Offset any remaining gain in one category with the remaining loss in the other.

The result is your net capital gain or net capital loss.

The $3,000 Annual Limit

If losses exceed gains, you can generally deduct up to $3,000 of the net loss against ordinary income each year, or $1,500 if married filing separately. Anything left over carries forward to future years. This is your capital loss carryover.

Worked Example: Loss Carryover

• Total gains: $12,000
• Total losses: $18,000
• Net capital loss: $6,000
• Deductible this year: $3,000
• Carried forward to next year: $3,000

Tax-Loss Harvesting and the Wash Sale Rule

Tax-loss harvesting means selling investments at a loss on purpose to offset gains elsewhere. The catch is the wash sale rule: if you buy the same or a substantially identical security within 30 days before or after the sale, you can't claim the loss that year. IRS Publication 550 explains wash sales in detail.

How to Calculate Your Capital Gains Tax for 2026: Step by Step

Follow this process for any sale:

1. Find your basis. Check your brokerage statement or purchase records.
2. Calculate the gain or loss. Subtract basis from sale proceeds.
3. Determine the holding period. More than one year is long-term.
4. Net your gains and losses within and across categories.
5. Estimate your ordinary taxable income. Start with total income, then subtract adjustments and your deduction.
6. Stack the gain on top. Use the threshold table to see how much falls into 0%, 15%, and 20%.
7. Check for NIIT. Compare your MAGI against the threshold for your filing status.
8. Add state tax if your state taxes capital gains.

To handle step 5 quickly, run your numbers through the Income Tax Calculator. If you're deciding between the standard deduction and itemizing, see our guide to standard vs. itemized deductions for 2026. The 2026 standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly.

How to Report Capital Gains to the IRS

Your broker sends a Form 1099-B showing your sales. You then report them on your return.

• Form 8949: Lists each sale, with dates, proceeds, basis, and gain or loss.
• Schedule D: Summarizes your totals and calculates your net capital gain or loss.
• Form 1040: Carries the final numbers onto your main return.
• Form 8960: Used if NIIT applies.

Keep records of your purchase price, dates, and any improvement costs. Mistakes in basis are among the most common errors on investment returns. Mismatched reporting can also draw attention, so it helps to know the common IRS audit triggers.

If you gather statements from multiple brokerages, our guide on how to combine tax documents into one PDF makes filing or sharing with a preparer simpler. Also check filing deadlines for 2026 so you don't miss a due date.

State Capital Gains Taxes: Federal Is Only Part of the Picture

Federal rates apply nationwide, but your state may add its own tax. Most states that tax income treat capital gains as ordinary income at their regular rates, rather than using a separate 0/15/20 schedule. A few states have special rules for certain gains.

• No state income tax: Residents of states like Texas and Florida owe no state tax on wages, and generally none on gains either. See our lists of states with no income tax in 2026 and Texas income tax rules.
• High-tax states: California taxes gains as ordinary income, so a high earner can see a steep combined rate. Review the California income tax rates for 2026.
• Special state rules: Some states, such as Washington, have separate taxes on certain long-term gains. Check your state's department of revenue for specifics.

Rules vary and change often. Use the US State Income Tax Calculator to estimate your state burden, and read our overview of federal vs. state income tax and the 2026 state income tax guide.

Selling Your Home: The Primary Residence Exclusion

Home sales follow different rules from stocks. If the home was your main residence, you may be able to exclude up to $250,000 of gain (single) or $500,000 (married filing jointly). You generally must have owned and lived in the home for at least two of the five years before the sale.

Gain above the exclusion is taxed as a capital gain. Investment properties and rentals don't qualify for the exclusion, and depreciation recapture can apply. See IRS Topic No. 701 for the current requirements.

Ways to Reduce Capital Gains Tax Legally

Smart planning is legal and common. Here are strategies worth discussing with a qualified professional:

1. Hold past one year. This is the simplest and most reliable lever.
2. Use tax-advantaged accounts. Gains inside a traditional IRA, Roth IRA, or 401(k) aren't taxed the same way as gains in a taxable brokerage account.
3. Harvest losses. Sell losers to offset winners, while watching the wash sale rule.
4. Time your sales. In a low-income year, more of your gain may fall in the 0% zone.
5. Spread gains across years. Avoid pushing one huge gain into the 20% bracket and triggering NIIT.
6. Donate appreciated assets. Giving appreciated stock held long-term to a qualified charity can avoid the gain entirely, while you may deduct the fair market value if you itemize.
7. Choose cost-basis methods carefully. Specific share identification can reduce your gain compared with the default method.
8. Use the home sale exclusion when you qualify.

Before any large sale, it helps to calculate your tax before meeting an accountant so you arrive with specific questions.

Real-World Examples: What 2026 Looks Like in Practice

These are illustrative scenarios, not predictions. Your results will depend on your full tax situation.

Example 1: The Early-Career Investor in the 0% Bracket

A single filer earns $38,000 in taxable income and sells ETF shares held two years for a $9,000 gain. Total taxable income lands at $47,000, below the $49,450 ceiling. The federal tax on the gain is $0.

Takeaway: In lower-income years, long-term gains can be completely tax-free at the federal level.

Example 2: The Mid-Career Couple

A married couple has $140,000 in ordinary taxable income and sells shares for a $40,000 long-term gain. Their income is already above the $98,900 ceiling, so the whole gain is taxed at 15%. Federal tax on the gain: $6,000.

Takeaway: For many middle- and upper-middle-income households, 15% is the rate that applies.

Example 3: The Impatient Trader

A single filer with $150,000 in taxable income sells a stock after eight months for a $25,000 gain. It's short-term, taxed at 24%, for $6,000. Had they waited a few more months, it would have been long-term at 15%, or $3,750.

Takeaway: A few months of patience can be worth more than a typical monthly paycheck.

Example 4: The High Earner With a Large Sale

A single filer with $520,000 in ordinary taxable income sells for a $60,000 long-term gain. Part is taxed at 15%, part at 20%, and NIIT likely applies. The combined federal tax is about $13,005, as shown earlier.

Takeaway: For high earners, the headline 20% rate understates the true bill.

Example 5: The Side-Hustle Investor

A freelancer sells crypto held 10 months for a $5,000 gain and also owes self-employment tax on business income. The crypto gain is short-term, taxed at ordinary rates, and doesn't change self-employment tax. Read about side hustle taxes in 2026 and use the US Self-Employment Tax Calculator to see the full picture.

Takeaway: Investment gains and business income are taxed under different rules, so track them separately.

Common Capital Gains Tax Mistakes to Avoid

1. Assuming the whole gain gets the lowest rate. Gains stack on ordinary income and can span several brackets.
2. Forgetting NIIT. It's easy to miss because it isn't part of the 0/15/20 structure.
3. Using the wrong basis. Forgetting reinvested dividends or improvement costs means you overpay.
4. Miscounting the holding period. Day 365 is not "more than one year."
5. Triggering a wash sale. Repurchasing too soon cancels your loss for that year.
6. Ignoring state tax. Federal rates are only part of what you owe.
7. Treating all assets the same. Collectibles, depreciation recapture, and QSBS follow different rules.
8. Leaving out gains from sales with no cash. A stock swap or crypto trade can still be a taxable sale.

Many of these errors also show up in basic calculations. Our guide to income tax calculator mistakes shows how to avoid them.

Why Choose Free Calculator for Tax Planning

Tax questions are easier when the tools are simple and the explanations are clear. Here's what makes Free Calculator useful for investors and everyday filers.

Why choose Free Calculator:

• A full tax toolkit: Browse the tools directory for income, salary, self-employment, and sales tax calculators.
• Plain-English guides: The blog library explains concepts such as federal vs. state taxes, gross vs. net pay, and W-2 vs. 1099 calculations.
• Clear limits: The platform's disclaimer is upfront that tools and articles are educational, not professional advice.
• Related planning tools: Estimate your sales tax by ZIP code or review how the child tax credit works in 2026.

Learn more on the About page, or reach the team through the Contact page. You can also review the Privacy Policy and Terms.

Explore Advanced Free Calculator: Once you understand capital gains, move on to the Income Tax Calculator and the US State Income Tax Calculator for a fuller estimate. Investors with international ties may also find our article on capital gains tax on property and stocks in Pakistan useful for comparison.

Who Needs to Understand Capital Gains Tax?

This isn't only a topic for Wall Street. It affects:

• Everyday investors with brokerage or crypto accounts
• Homeowners and landlords selling property
• Retirees drawing down taxable investments
• Small business owners selling a company or equipment
• Employees with stock compensation, such as RSUs or ESPP shares
• Freelancers and side hustlers who invest their earnings
• Families receiving inherited assets

Financial planners, tax preparers, and enrolled agents build entire careers around this knowledge. Income varies widely by market and experience, so treat any specific salary claim with caution.

How to Keep Learning: Free and Paid Resources

Free Resources

• IRS Topic No. 409: The official summary of capital gains and losses.
• IRS Publication 550: A detailed guide to investment income and expenses.
• IRS 2026 inflation adjustments: The announcement behind this year's numbers.
• Tax Foundation: Reader-friendly bracket tables with sources.
• Free Calculator guides: Start with the glossary.

Paid Resources

• Online courses: Platforms like Coursera and Udemy offer personal finance and tax basics.
• Tax software: Commercial programs can import 1099-B data directly.
• Licensed professionals: A CPA or enrolled agent can model complex scenarios, such as large stock sales or business exits.

Frequently Asked Questions

What is the capital gains tax rate in 2026?

For 2026, most long-term capital gains are taxed federally at 0%, 15%, or 20%, depending on taxable income and filing status. Short-term gains are taxed at ordinary income rates from 10% to 37%. High earners may also owe the 3.8% Net Investment Income Tax.

What is the 0% capital gains threshold for 2026?

The 0% long-term rate applies to taxable income up to $49,450 for single filers, $98,900 for married couples filing jointly, and $66,200 for heads of household. Married filing separately uses $49,450. These figures come from IRS Revenue Procedure 2025-32.

Are short-term capital gains taxed as ordinary income?

Yes. Gains on assets held one year or less are added to your other income and taxed at your regular marginal rate, which ranges from 10% to 37% in 2026. Holding an asset for more than one year can qualify it for lower long-term rates.

How much capital loss can I deduct in 2026?

You can generally deduct up to $3,000 of net capital losses against ordinary income, or $1,500 if married filing separately. Larger losses carry forward to future years. Losses first offset capital gains before the $3,000 limit applies.

Do I owe state tax on capital gains?

Often yes. Most states that tax income treat capital gains as ordinary income at their regular rates. States with no income tax, such as Texas and Florida, generally don't tax gains. A few states have separate rules, so check your state's revenue department.

What is the difference between capital gains tax and the Net Investment Income Tax?

Capital gains tax is the 0%, 15%, or 20% rate on long-term gains. The Net Investment Income Tax is a separate 3.8% tax on certain investment income when MAGI exceeds $200,000 (single) or $250,000 (married filing jointly). Both can apply to the same gain.

Conclusion:

Capital gains tax comes down to three questions: How long did you hold the asset? What is your taxable income and filing status? Do any special rules apply?

Here's your short checklist:

• Check the holding period. More than one year unlocks 0%, 15%, or 20%.
• Stack your gain on ordinary income. Use the 2026 thresholds to see where it lands.
• Watch for NIIT. MAGI above $200,000 (single) or $250,000 (joint) can add 3.8%.
• Use losses wisely. Offset gains, then deduct up to $3,000, and carry over the rest.
• Add state tax. Federal is only part of the bill.
• Keep records. Basis documentation protects you at filing time.

Ready to put numbers to your situation? Open the Free Calculator Income Tax Calculator and estimate your taxable income, then check where your gain falls on the 2026 brackets. Compare your state burden with the US State Income Tax Calculator.