Capital Gains Tax 2026

Long-Term vs Short-Term

The single most important fact about capital gains tax: the holding period decides the rate. Sell an asset you owned for more than one year and the profit is a long-term gain, taxed at a preferential 0%, 15%, or 20%. Sell at one year or less and it is a short-term gain, taxed as ordinary income — meaning your normal bracket, which for many people is 22% to 32%, and can be as high as 37%.

That is why the difference between 11 months and 13 months can be worth thousands. A $10,000 profit held short-term at a 37% ordinary rate costs $3,700; the same profit held long-term in the 15% bracket costs $1,500.

The 2026 Thresholds

Long-term capital gains use three brackets based on your total taxable income for the year. For 2026:

Notice how wide the 0% bracket is: a married couple with up to $96,700 of taxable income pays zero on long-term gains. That makes the "sell in a low-income year" strategy — a sabbatical, early retirement, or between jobs — genuinely powerful.

How Gains Stack on Your Salary

The subtle part: your gains sit on top of your ordinary income, and the two together determine which long-term bracket your gains land in. A single filer with $60,000 of salary (about $43,900 taxable after the standard deduction) has room for about $4,450 of gains at the 0% rate before spilling into 15%. The same filer with $100,000 of salary has already filled the 0% bucket with wages, so every dollar of gain lands in the 15% bracket.

This is why the same profit can be taxed at 0% for one person and 15% for another — the bracket depends on your entire income picture, not the gain in isolation.

The 3.8% NIIT

On top of the capital gains brackets sits the net investment income tax (NIIT): a 3.8% surtax on investment income — including capital gains, dividends, and interest — for single filers with modified adjusted gross income above $200,000 ($250,000 for married filing jointly). For a high earner, the true long-term rate is effectively 18.8% (15% + 3.8%) or 23.8% (20% + 3.8%), and short-term gains can hit 40.8% at the top ordinary bracket.

Harvesting in Q4

September through December is when investors square up gains and losses for the year. The moves worth knowing:

• Tax-loss harvesting — sell losers to offset winners, then up to $3,000 of net loss against ordinary income. Mind the wash-sale rule: no repurchase of the same security within 30 days.
• Defer the sale to January — a gain realized in January is taxed a full year later.
• Fill the 0% bracket — if your income is temporarily low, realize gains up to the $48,350 (single) / $96,700 (joint) line at 0%.

Capital gains are not payroll income, so the state and local tax treatment depends on your state — and some states tax all capital gains as ordinary income regardless of holding period.

Frequently Asked Questions