Capital Gains Tax Rates 2026: What Changed

The IRS quietly raised the 0% capital gains bracket income limit again for 2026. Here's exactly how much you can realize tax-free — and what every investor needs to know before selling stocks, real estate, or crypto this year.

Capital gains taxes are separate from ordinary income taxes. Long-term gains on assets held more than one year are taxed at preferential rates of 0%, 15%, or 20%. Short-term gains are taxed as ordinary income. Understanding which bracket applies to your situation can save thousands of dollars, and the 2026 inflation adjustment shifts the thresholds upward from 2025.

2026 Capital Gains Tax Brackets

Long-term capital gains tax rates for 2026 are based on your taxable income (not just the gain itself). The IRS adjusts these thresholds annually for inflation. The figures below are the projected 2026 amounts based on the applicable inflation adjustment — mark these as estimates until the IRS publishes Rev. Proc. 2025-XX.

Single Filers — 2026 Long-Term Capital Gains Rates

Married Filing Jointly — 2026 Long-Term Capital Gains Rates

Head of Household — 2026 Long-Term Capital Gains Rates

What changed from 2025:Each threshold increased by roughly 2.4% due to the annual cost-of-living adjustment. A single filer's 0% ceiling moved up from approximately $47,025 (2025) to ~$48,350 (2026) — meaning you can realize about $1,325 more in gains tax-free compared to last year.

Use our capital gains tax calculator to run exact numbers for your situation, or check your income tax bracket to understand how gains stack on top of ordinary income.

Short-Term vs Long-Term: The 1-Year Rule

The most important variable in capital gains taxation is holding period. Hold for more than one year and the preferential long-term rates above apply. Hold for one year or less and your gain is short-term, taxed as ordinary income — the same as wages.

Why this matters in practice:

• You buy 100 shares of a stock at $50 each (cost basis: $5,000)
• You sell at $80 per share (proceeds: $8,000)
• Your gain is $3,000
• Short-term (sold within 1 year): At a 22% ordinary income bracket, you owe $660 in federal tax
• Long-term (sold after 1 year): At the 15% long-term rate, you owe $450 — a $210 savings on a single trade
• At the 37% bracket vs 20% rate, the same $3,000 gain costs $1,110 short-term vs $600 long-term

The holding period starts the day after acquisition and ends on the date of sale. The IRS uses a specific date rule — selling on day 365 is short-term; selling on day 366 is long-term.

Short-term capital gains rates for 2026 track the ordinary income tax brackets, ranging from 10% to 37%. High earners in the top bracket pay more than double the long-term rate on short-term gains.

The NIIT: 3.8% Surtax on Investment Income

Above certain income thresholds, a second layer of tax applies: the Net Investment Income Tax (NIIT), also called the Medicare surtax. This 3.8% charge was enacted as part of the Affordable Care Act and is codified under IRC §1411.

NIIT applies when your modified adjusted gross income (MAGI) exceeds:

• $200,000 — single filers
• $250,000 — married filing jointly
• $125,000 — married filing separately
• $200,000 — head of household

Critical detail: These NIIT thresholds are not adjusted for inflation. They have been fixed since 2013. Every year, more households cross these thresholds due to wage growth.

The NIIT applies to the lesser of: (a) your net investment income, or (b) the amount by which your MAGI exceeds the threshold.

Example — single filer with $220,000 MAGI and $15,000 long-term gains:

• MAGI excess above threshold: $220,000 − $200,000 = $20,000
• Net investment income: $15,000
• Lesser amount: $15,000
• NIIT owed: $15,000 × 3.8% = $570
• Combined federal rate on these gains: 15% + 3.8% = 18.8%

At the 20% bracket, the combined long-term rate becomes 23.8%. Factor this into any decision to realize gains above the threshold.

Capital Gains on Home Sales

Real estate gets special treatment. Under IRC §121, you can exclude a large chunk of gain from your primary residence sale before any capital gains tax applies.

2026 home sale exclusion amounts (unchanged, not inflation-adjusted):

• Single filers: Exclude up to $250,000 of gain
• Married filing jointly: Exclude up to $500,000 of gain

Qualification requirements:

• You owned the home for at least 2 of the last 5 years (ownership test)
• You used it as your primary residence for at least 2 of the last 5 years (use test)
• You have not claimed the exclusion on another home sale in the prior 2 years
• The 2 years of ownership and use do not need to overlap

Depreciation recapture: If you ever claimed depreciation on the home (for example, if you rented part of it or used part as a home office), that depreciation is subject to unrecaptured Section 1250 gain, taxed at a maximum rate of 25% — not the standard long-term rate. This applies even if your total gain falls below the exclusion threshold.

Partial exclusion: If you fail the 2-year tests due to a change in employment, health, or unforeseen circumstances, you may qualify for a reduced exclusion proportional to how long you occupied the home.

Crypto and NFT Capital Gains in 2026

The IRS treats cryptocurrency and NFTs as property, not currency. Every disposal — sale, trade, or exchange — is a taxable event subject to capital gains rules.

• Hold crypto or NFTs more than one year before selling: long-term rates apply (0%, 15%, 20%)
• Hold one year or less: short-term rates apply (ordinary income, up to 37%)
• Trading one crypto for another (e.g., BTC → ETH) is a taxable disposal at fair market value
• Using crypto to buy goods or services triggers a gain/loss calculation

The wash sale gap remains open in 2026. The wash sale rule (IRC §1091) disallows a loss deduction when you sell a security at a loss and repurchase the same or substantially identical security within 30 days before or after the sale. As of 2026, this rule applies to stocks and bonds — but not to cryptocurrency. You can sell Bitcoin at a loss on December 31, immediately rebuy, and still claim the tax loss. This is a significant planning opportunity that proposed legislation has repeatedly attempted to close but has not yet done so.

See our wash sale calculator to verify whether a planned stock sale triggers a disallowed loss, and our tax-loss harvesting calculator to quantify your annual tax savings.

Strategies to Reduce Your Capital Gains Tax Bill

1. Tax-Loss Harvesting

Sell underperforming positions at a loss to offset gains realized elsewhere in your portfolio. Capital losses offset capital gains dollar-for-dollar. If losses exceed gains, you can deduct up to $3,000 of net losses against ordinary income per year, carrying forward any remaining losses indefinitely.

Example: You realize $10,000 in long-term gains from selling Stock A. You also hold Stock B at a $4,000 unrealized loss. Selling Stock B harvests the loss, reducing your net taxable gain to $6,000. At 15%, that saves $600 in federal tax immediately.

2. Hold for Long-Term Status

The simplest strategy: wait until an asset crosses the 1-year holding threshold before selling. On a $50,000 gain, the difference between the top short-term rate (37%) and top long-term rate (20%) is $8,500 in federal tax. Even mid-bracket investors save substantially — 22% vs 15% on the same $50,000 gain is $3,500.

3. Realize Gains in the 0% Bracket

If your taxable income falls below $48,350 (single) or $96,700 (MFJ) in 2026, you pay zero federal capital gains tax on long-term gains. This bracket is especially valuable during low-income years — career transitions, early retirement, sabbaticals, or years when large deductions reduce taxable income.

Bracket-filling strategy:Calculate how much room you have below the 0% ceiling. If you have $20,000 of space, you can realize up to $20,000 in long-term gains tax-free. This is called "gain harvesting" — the inverse of loss harvesting.

4. Gift Appreciated Shares

When you gift appreciated stock to a family member in a lower tax bracket (such as an adult child or elderly parent), they pay capital gains tax at their rate — potentially 0% — rather than yours. The recipient's cost basis is the donor's original basis, so the gain is preserved but taxed at a lower rate when they sell.

Annual gift tax exclusion for 2026: $19,000 per recipient (estimated, subject to inflation adjustment). Gifts within this limit require no gift tax return.

Donating appreciated shares directly to a qualified charity is even more powerful: you deduct the full fair market value and pay zero capital gains tax on the appreciation — a double benefit unavailable when you sell the shares first and donate cash.

5. Roth Conversions in Low-Income Years

A Roth conversion adds taxable income to your return, which can push you into a higher capital gains bracket. Conversely, years with low ordinary income are ideal for both: harvesting long-term gains at 0% and converting traditional IRA balances to Roth at low marginal rates.

Coordinate both moves carefully. Stacking Roth conversions on top of realized gains can push income past the 0% ceiling or above the NIIT threshold. The investment calculator can help model after-tax outcomes across different scenarios.

6. Installment Sales for Large Gains

Selling a business, rental property, or large stock position? Structuring the sale as an installment sale (IRC §453) spreads gain recognition over multiple tax years. This keeps annual taxable income below higher brackets and below the NIIT threshold, reducing the effective tax rate on the total gain.

7. Opportunity Zone Investments

Investing realized gains in a Qualified Opportunity Fund within 180 days of the sale defers the original gain until 2026 (deadline has passed for some programs) and eliminates tax on appreciation within the fund if held for 10+ years. Evaluate carefully — liquidity risk and fund quality vary widely.

Capital Gains Rate Comparison: 2024 vs 2025 vs 2026

The 0% bracket ceiling has grown roughly $1,300–$2,650 per year for single filers since 2022, tracking the broader inflation adjustment applied to all federal tax parameters.

How Capital Gains Stack on Ordinary Income

Long-term gains do not simply sit in their own bracket — they stack on top of ordinary income for bracket determination purposes.

Formula for your effective capital gains rate:

• Step 1: Calculate taxable ordinary income (wages, interest, short-term gains, etc.)
• Step 2: Add long-term gains to get total taxable income
• Step 3: The portion of total taxable income that falls in each capital gains bracket determines the rate applied to that tranche of gains

Example — single filer, $40,000 ordinary income, $20,000 long-term gains:

• Taxable ordinary income: $40,000
• Total taxable income: $60,000
• 0% ceiling for single: ~$48,350
• Gains that fit below the ceiling: $48,350 − $40,000 = $8,350 taxed at 0%
• Remaining gains: $20,000 − $8,350 = $11,650 taxed at 15%
• Total capital gains tax: $0 + $1,748 = $1,748
• Effective rate on the $20,000 gain: 8.7%

This stacking mechanic means proximity to bracket boundaries matters. Reducing ordinary income by $8,350 through a pre-tax retirement contribution in this example would move all gains into the 0% bracket and eliminate the $1,748 tax bill entirely.

Run Your Numbers

The strategies above only work if you know exactly where your income falls relative to the 2026 thresholds. Use these calculators to model your specific situation:

Key Takeaways

• The 0% long-term capital gains bracket expanded for 2026: ~$48,350 (single) and ~$96,700 (MFJ) — roughly $1,325 more room than 2025
• Short-term gains are taxed as ordinary income — hold assets over 1 year to qualify for preferential rates
• The NIIT adds 3.8% above $200,000 MAGI (single) / $250,000 (MFJ); thresholds are frozen and not inflation-adjusted
• Home sale exclusions remain $250,000 / $500,000 — depreciation recapture is taxed separately at up to 25%
• Crypto wash sale rules still have a gap in 2026 — loss harvesting without the 30-day restriction remains available for digital assets
• Gain harvesting in low-income years, gifting appreciated shares, and coordinating Roth conversions are the most powerful year-round strategies

Sources

Capital gains rate structure from IRS Publication 550 (Investment Income and Expenses) and IRC §§ 1(h), 1411, 121, 453, 1091. 2026 bracket thresholds are projected estimates based on the applicable CPI-U inflation adjustment; consult the IRS revenue procedure for final figures. This article is for informational purposes and does not constitute tax advice — consult a qualified tax professional for guidance specific to your situation.