Short-Term vs. Long-Term Capital Gains
How long you owned the asset decides which rates apply.
- Short-term gains, on assets held one year or less, are taxed as ordinary income in the same brackets as your salary, from 10% to 37%.
- Long-term gains, on assets held more than one year, are taxed at 0%, 15% or 20%, depending on your taxable income.
A gain is taxed as the top slice of your income. Your salary and other ordinary income fill the lower bands first, and the gain sits on top. That is why part of a gain can be taxed at 0% and the rest at 15%.
Take a single filer earning $50,000 in 2026 who sells shares for a $20,000 profit. After the $16,100 standard deduction, taxable income is $33,900. If the shares were held more than a year, the first $15,550 of the gain fits under the $49,450 line and is taxed at 0%, and the remaining $4,450 at 15%, for $668 in total. Sold a year or less after purchase, the same gain is ordinary income and costs $2,750.
2026 Long-Term Capital Gains Tax Rates
By taxable income, which includes the gain.
| Rate | Single | Married Filing Jointly | Married Filing Separately | Head of Household |
|---|---|---|---|---|
| 0% | Up to $49,450 | Up to $98,900 | Up to $49,450 | Up to $66,200 |
| 15% | Up to $545,500 | Up to $613,700 | Up to $306,850 | Up to $579,600 |
| 20% | Over $545,500 | Over $613,700 | Over $306,850 | Over $579,600 |
2025 Long-Term Capital Gains Tax Rates
For returns filed in 2026 covering the 2025 tax year.
| Rate | Single | Married Filing Jointly | Married Filing Separately | Head of Household |
|---|---|---|---|---|
| 0% | Up to $48,350 | Up to $96,700 | Up to $48,350 | Up to $64,750 |
| 15% | Up to $533,400 | Up to $600,050 | Up to $300,000 | Up to $566,700 |
| 20% | Over $533,400 | Over $600,050 | Over $300,000 | Over $566,700 |
The Net Investment Income Tax (NIIT)
Higher earners can owe an extra 3.8% on investment income, short-term and long-term gains alike. It applies to the lesser of your net investment income or the amount by which your modified adjusted gross income exceeds:
- $200,000 for single filers and heads of household
- $250,000 for married couples filing jointly
- $125,000 for married filing separately
These thresholds are written into the law and are not adjusted for inflation, so more people cross them each year. The calculator adds NIIT when your inputs put you over the line.
Ways to Lower the Tax
- Hold for more than a year so the gain qualifies for long-term rates.
- Harvest losses: selling investments at a loss in the same year offsets gains. Buying the same or a substantially identical security within 30 days before or after the sale disallows the loss under the wash sale rule.
- Use tax-advantaged accounts: gains inside a 401(k) or IRA are not taxed when they occur. Traditional account withdrawals are taxed later as ordinary income; qualified Roth withdrawals are tax-free.
- Give appreciated shares instead of cash: donating stock held more than a year to a public charity avoids tax on the gain, and you can deduct its market value if you itemize, generally up to 30% of AGI.
- Choose the year of the sale: in a year with lower income, more of the gain can fall in the 0% band.
- Use the home-sale exclusion: up to $250,000 of gain on your main home ($500,000 for joint filers) is excluded if you owned and lived in it for two of the five years before the sale.
Frequently Asked Questions
What is the capital gains tax rate for 2026?
Long-term gains are taxed at 0%, 15%, or 20%, depending on your taxable income and filing status. For a single filer, 0% applies up to $49,450 of taxable income and 20% above $545,500. Short-term gains are taxed as ordinary income at 10% to 37%. A 3.8% Net Investment Income Tax can apply on top of either.
How long do I have to hold an investment for long-term rates?
More than one year. The holding period starts the day after you buy and includes the day you sell, so shares bought on March 10, 2025 need to be sold on March 11, 2026 or later. Inherited property is always treated as long-term.
Do I owe capital gains tax if I lost money?
No. A loss offsets capital gains dollar for dollar. If your losses for the year are larger than your gains, you can deduct up to $3,000 of the difference against other income ($1,500 if married filing separately) and carry the rest forward to later years.
Does my state tax capital gains?
Most states with an income tax treat capital gains as ordinary income, though a few exclude part of a long-term gain. States with no broad income tax, such as Florida, Texas and Nevada, do not tax them. Washington is the exception: it has no income tax but levies a capital gains tax of 7% on long-term capital gains above an annual standard deduction ($278,000 for 2025, indexed for inflation), plus an additional 2.9% (9.9% in total) on gains above $1 million. This calculator covers federal tax only.