Capital Gains Tax 2026: How It Works and What You Owe
A capital gain is the profit you make when you sell an asset — stocks, bonds, real estate, cryptocurrency, or other property — for more than you paid for it. For 2026, long-term capital gains (assets held over one year) are taxed at preferential rates of 0%, 15%, or 20% depending on your income and filing status. Short-term capital gains (assets held one year or less) are taxed at ordinary income tax rates of 10% to 37%. High earners may also owe an additional 3.8% Net Investment Income Tax (NIIT), bringing the top effective rate to 23.8%.
Quick Answer
- *According to the IRS, long-term capital gains rates for 2026 are 0%, 15%, or 20% based on taxable income and filing status.
- *According to the Tax Foundation, the 0% rate applies to single filers with taxable income up to $49,450 and MFJ filers up to $98,900.
- *Short-term gains are taxed at ordinary income rates (10%–37%), the same as your wages.
- *The 3.8% NIIT applies to investment income for individuals with MAGI above $200,000 (single) or $250,000 (MFJ).
2026 Long-Term Capital Gains Tax Brackets
Long-term capital gains apply to assets held for more than one year. The rates are based on your taxable income (including the gains):
| Rate | Single | Married Filing Jointly | Head of Household |
|---|---|---|---|
| 0% | Up to $49,450 | Up to $98,900 | Up to $66,200 |
| 15% | $49,451 – $492,300 | $98,901 – $553,850 | $66,201 – $523,050 |
| 20% | Over $492,300 | Over $553,850 | Over $523,050 |
These thresholds are inflation-adjusted for 2026. A married couple with $90,000 in taxable income (including gains) would pay 0% capital gains tax on their long-term gains.
Short-Term Capital Gains Tax Rates
Short-term capital gains (assets held one year or less) are taxed as ordinary income, using the same 2026 brackets as your wages:
| Rate | Single Filer Taxable Income |
|---|---|
| 10% | $0 – $11,925 |
| 12% | $11,926 – $48,475 |
| 22% | $48,476 – $103,350 |
| 24% | $103,351 – $197,300 |
| 32% | $197,301 – $250,525 |
| 35% | $250,526 – $626,350 |
| 37% | Over $626,350 |
This is why holding investments for at least a year and a day can make a significant tax difference. A single filer in the 24% bracket would pay 24% on short-term gains but only 15% on long-term gains — a 9 percentage point savings.
How to Calculate Capital Gains Tax
Step 1: Determine Your Cost Basis
Your cost basis is generally the purchase price plus any commissions, fees, or reinvested dividends. For inherited assets, the basis is typically the fair market value at the date of death (a “stepped-up” basis).
Step 2: Calculate the Gain (or Loss)
Capital Gain = Sale Price − Cost Basis
Step 3: Determine Short-Term or Long-Term
If you held the asset for more than one year (366+ days), the gain is long-term. One year or less, it is short-term.
Step 4: Apply the Appropriate Rate
Add the gain to your other taxable income and apply the appropriate bracket.
Worked Example
Alex, a single filer, has $80,000 in W-2 income (taxable income after standard deduction: $64,300). Alex sells stock held for 2 years with a $20,000 long-term gain:
- Total taxable income including gain: $64,300 + $20,000 = $84,300
- The first $49,450 of gains falls in the 0% bracket: tax = $0
- The remaining gains ($84,300 − $49,450 = $34,850, but only $20,000 is gain): taxed at 15%
- Since $64,300 already exceeds the 0% threshold, the entire $20,000 gain is in the 15% bracket
- Capital gains tax: $20,000 × 15% = $3,000
The Net Investment Income Tax (NIIT)
High earners face an additional 3.8% surtax on net investment income under IRC Section 1411. It applies to individuals with modified adjusted gross income (MAGI) above:
- $200,000 for single filers
- $250,000 for married filing jointly
- $125,000 for married filing separately
The NIIT applies to capital gains, dividends, interest, rental income, and royalties. Combined with the 20% long-term rate, the top effective rate on long-term gains is 23.8%.
Capital Losses: How to Offset Gains
Capital losses are a powerful tax tool:
- Gains offset gains: Short-term losses first offset short-term gains; long-term losses first offset long-term gains.
- Net losses offset income: Up to $3,000 of net capital losses per year can be deducted against ordinary income ($1,500 if married filing separately).
- Carry forward: Unused losses carry forward indefinitely to future tax years.
- Wash sale rule: You cannot claim a loss if you repurchase a “substantially identical” security within 30 days before or after the sale.
Strategies to Minimize Capital Gains Tax
Hold for Over One Year
The single most effective strategy. Long-term rates (0%–20%) are significantly lower than short-term rates (10%–37%).
Tax-Loss Harvesting
Sell losing investments to generate capital losses that offset your gains. Reinvest in a similar (but not “substantially identical”) asset to maintain market exposure.
Use Tax-Advantaged Accounts
Investments in 401(k)s, IRAs, Roth IRAs, and HSAs grow tax-free or tax-deferred. Gains within these accounts do not trigger capital gains tax.
Donate Appreciated Assets
Donating appreciated stock to charity lets you avoid capital gains tax entirely and deduct the full fair market value (if held over one year).
Harvest the 0% Bracket
If your taxable income falls below the 0% threshold ($49,450 single / $98,900 MFJ), sell appreciated assets to “realize” gains tax-free and reset your cost basis higher.
Special Situations
Real Estate Capital Gains
The home sale exclusion allows you to exclude up to $250,000 ($500,000 for married couples) of gain on the sale of your primary residence if you lived there for at least 2 of the last 5 years. Gains above the exclusion are taxed at capital gains rates. Investment properties do not qualify for this exclusion but may benefit from a 1031 exchange.
Cryptocurrency
The IRS treats cryptocurrency as property. Every sale, trade, or use of crypto is a taxable event. The same short-term and long-term rates apply based on holding period.
Collectibles
Long-term gains on collectibles (art, antiques, coins, precious metals) are taxed at a maximum rate of 28%, higher than the standard 20% top rate.
Calculate your stock profit and capital gains
Use our free Stock Profit Calculator →Also useful: Income Tax Calculator · ROI Calculator
Frequently Asked Questions
What is the capital gains tax rate for 2026?
Long-term capital gains are taxed at 0%, 15%, or 20% depending on your taxable income. Single filers pay 0% on gains up to $49,450, 15% from $49,451 to $492,300, and 20% above that. Short-term gains are taxed as ordinary income at 10%–37%.
How do I calculate capital gains tax on stock sales?
Subtract your cost basis (purchase price + fees) from the sale price. If you bought 100 shares at $50 and sold at $80, your gain is $3,000. Apply the long-term rate (if held over a year) or ordinary income rate (if held a year or less).
What is the Net Investment Income Tax (NIIT)?
The NIIT is an additional 3.8% tax on investment income for individuals with MAGI above $200,000 (single) or $250,000 (MFJ). It applies to capital gains, dividends, interest, and rental income. The top effective long-term rate with NIIT is 23.8%.
Can I use capital losses to offset gains?
Yes. Capital losses offset gains dollar for dollar. If losses exceed gains, you can deduct up to $3,000 against ordinary income per year, with remaining losses carried forward indefinitely. Watch the wash sale rule: do not repurchase a substantially identical security within 30 days.