Capital gains tax 2026
Long-term capital gains (on assets you held more than one year) are taxed at 0%, 15%, or 20% in 2026, depending on your taxable income. These rates are lower than the ordinary income tax rates. Short-term capital gains (on assets held one year or less) get no break. They are taxed as ordinary income at your regular rate. Your filing status and your total taxable income decide which long-term rate applies.
What is a capital gain?
A capital gain is the profit you make when you sell a capital asset for more than you paid for it. A capital asset is most property you own for personal or investment use. Stocks, bonds, mutual funds, and real estate are common examples. The IRS puts it simply: "the difference between the adjusted basis in the asset and the amount you realized from the sale is a capital gain or a capital loss."
You only owe the tax when you sell. An asset that has risen in value but that you still hold triggers no tax. That is an unrealized gain.
What is the difference between short-term and long-term capital gains?
The dividing line is one year. If you hold the asset for more than one year before you sell, the gain is long-term. If you hold it for one year or less, the gain is short-term.
This distinction is the single most important thing to understand about capital gains. Long-term gains qualify for the reduced 0%, 15%, and 20% rates. Short-term gains do not. Short-term gains are "subject to taxation as ordinary income at graduated tax rates," which run as high as 37%. Holding an asset one extra day past the one-year mark can move it into the lower long-term rates.
What is the capital gains tax rate for 2026?
For 2026, the long-term capital gains rate is 0%, 15%, or 20%. Your rate depends on your taxable income and filing status. The table below shows the taxable-income breakpoints published by the IRS in Revenue Procedure 2025-32. Read it this way: income up to the first number is taxed at 0%, income between the two numbers is taxed at 15%, and income above the second number is taxed at 20%.
| Filing status | 0% rate | 15% rate | 20% rate |
|---|---|---|---|
| Single | Up to $49,450 | $49,451 to $545,500 | Over $545,500 |
| Married filing jointly | Up to $98,900 | $98,901 to $613,700 | Over $613,700 |
| Married filing separately | Up to $49,450 | $49,451 to $306,850 | Over $306,850 |
| Head of household | Up to $66,200 | $66,201 to $579,600 | Over $579,600 |
Source: IRS Revenue Procedure 2025-32, Section 3.03, "Maximum Capital Gains Rate."
These figures are the taxable income amounts, not your gross pay. Taxable income is what remains after your standard or itemized deductions. The gain itself counts toward this income. A large gain can push part of your income from the 0% band into the 15% band.
How much can I make before I pay capital gains tax?
You can realize long-term gains and pay 0% federal tax on them as long as your total taxable income stays at or below the 0% ceiling for your filing status. In 2026 that ceiling is $49,450 for single filers, $98,900 for married couples filing jointly, $66,200 for heads of household, and $49,450 for married filing separately.
Here is the mechanism. The IRS stacks your long-term gains on top of your other income. If your ordinary income plus your gains lands under the 0% ceiling, the gains are taxed at 0%. If your total sits above it, only the portion above the ceiling gets taxed, and it is taxed at 15% until you reach the 20% breakpoint. This is why a retiree with modest income can sometimes sell appreciated stock and owe nothing.
What is the 3.8% surtax on investment income?
High earners pay an extra layer. The Net Investment Income Tax (NIIT) adds 3.8% on top of the capital gains rate. It applies to net investment income when your modified adjusted gross income (MAGI) crosses a threshold.
The 2026 NIIT thresholds are:
- $200,000 for single or head of household
- $250,000 for married filing jointly or qualifying surviving spouse
- $125,000 for married filing separately
These thresholds are set by statute and are not adjusted for inflation. They have not changed since the tax began. The 3.8% applies to the smaller of your net investment income or the amount your MAGI exceeds the threshold. So a single filer in the 20% long-term bracket with high investment income can face an effective federal rate of 23.8% on those gains.
How do I lower my capital gains tax?
A few common moves reduce the bill. None of these is tax advice for your specific situation.
- Hold for more than a year. This is the cleanest way to move a gain from ordinary rates to the long-term rates.
- Harvest losses. Capital losses offset capital gains dollar for dollar. If losses exceed gains, you can deduct up to $3,000 against ordinary income per year and carry the rest forward.
- Watch your bracket. In a low-income year, selling just enough to stay under the 0% ceiling can make some gains tax-free.
- Use tax-advantaged accounts. Gains inside a 401(k), traditional IRA, or Roth IRA are not taxed as they occur.
Key takeaways
Long-term gains beat short-term gains at tax time. The one-year holding period is the trigger. Your 2026 rate is 0%, 15%, or 20% based on taxable income and filing status, and high earners add the 3.8% surtax on top. Check your taxable income against the table above to find your rate. This page is for general information and is not tax advice. Consult a tax professional or the IRS for your situation.
Sources
- 2026 maximum zero-rate and 15% capital gains breakpoints by filing status: IRS, Revenue Procedure 2025-32, Section 3.03 (PDF).
- 2026 inflation adjustments overview: IRS Newsroom, IR-2025-103, tax inflation adjustments for tax year 2026.
- Definition of a capital gain, the one-year holding period, and the 0/15/20% long-term rates: IRS, Topic No. 409, Capital Gains and Losses.
- The 3.8% Net Investment Income Tax and its MAGI thresholds: IRS, Topic No. 559, Net Investment Income Tax.