Long-term capital gains — profits from selling assets held more than one year — are taxed at preferential rates compared to ordinary income. For 2026, the IRS has inflation-adjusted the income thresholds at which each capital gains rate applies. Understanding these thresholds is essential for investors, homeowners, and anyone considering selling appreciated assets.
How Capital Gains Tax Works
Capital gains are divided into two categories:
- Short-term: Assets held one year or less. Taxed as ordinary income at your regular bracket rate (up to 37%).
- Long-term: Assets held more than one year. Taxed at 0%, 15%, or 20% depending on your taxable income.
The lower long-term rates are one of the most powerful tax preferences available to investors. Holding an asset for just over one year versus just under one year can dramatically reduce the tax on a gain.
2026 Long-Term Capital Gains Thresholds: Single Filers
| Rate | 2025 Taxable Income | 2026 Taxable Income | Change |
|---|---|---|---|
| 0% | $0 – $48,350 | $0 – $49,700 | +$1,350 |
| 15% | $48,351 – $533,400 | $49,701 – $548,340 | +$14,940 |
| 20% | Over $533,400 | Over $548,340 | +$14,940 |
2026 Long-Term Capital Gains Thresholds: Married Filing Jointly
| Rate | 2025 Taxable Income | 2026 Taxable Income | Change |
|---|---|---|---|
| 0% | $0 – $96,700 | $0 – $99,400 | +$2,700 |
| 15% | $96,701 – $600,050 | $99,401 – $616,850 | +$16,800 |
| 20% | Over $600,050 | Over $616,850 | +$16,800 |
2026 Long-Term Capital Gains Thresholds: Head of Household
| Rate | 2025 Taxable Income | 2026 Taxable Income | Change |
|---|---|---|---|
| 0% | $0 – $64,750 | $0 – $66,570 | +$1,820 |
| 15% | $64,751 – $566,700 | $66,571 – $582,640 | +$15,940 |
| 20% | Over $566,700 | Over $582,640 | +$15,940 |
2026 Long-Term Capital Gains Thresholds: Married Filing Separately
| Rate | 2025 Taxable Income | 2026 Taxable Income | Change |
|---|---|---|---|
| 0% | $0 – $48,350 | $0 – $49,700 | +$1,350 |
| 15% | $48,351 – $300,000 | $49,701 – $308,400 | +$8,400 |
| 20% | Over $300,000 | Over $308,400 | +$8,400 |
Net Investment Income Tax (NIIT)
In addition to capital gains rates, higher-income taxpayers face the 3.8% Net Investment Income Tax (NIIT) on certain investment income. Unlike the capital gains thresholds, the NIIT income thresholds are not adjusted for inflation:
| Filing Status | NIIT Threshold (2025 and 2026) |
|---|---|
| Single / Head of Household | $200,000 |
| Married Filing Jointly | $250,000 |
| Married Filing Separately | $125,000 |
NIIT applies to the lesser of net investment income or the amount by which modified AGI exceeds the threshold. Investment income subject to NIIT includes capital gains, dividends, interest, rents, royalties, and passive income from partnerships and S-corporations.
Example: A single filer with $220,000 in AGI, including $40,000 in capital gains and dividends, owes NIIT on $20,000 (the excess above $200,000). The NIIT = $20,000 × 3.8% = $760.
For high earners in the 20% capital gains bracket who also owe NIIT, the effective rate on long-term gains reaches 23.8% — still well below the top ordinary income rate of 37%.
Special Capital Gains Rates
Not all capital gains qualify for the standard 0/15/20% rates:
Collectibles (28% Rate)
Gains from selling collectibles — art, antiques, coins, stamps, precious metals held as investments, and certain other items — are taxed at a maximum rate of 28% regardless of your regular income. This rate is unchanged for 2026.
Gains from selling qualified small business stock (Section 1202) that does not qualify for the 100% exclusion may also be subject to the 28% rate.
Depreciation Recapture (25% Rate)
When you sell rental property or other depreciable real estate at a gain, a portion of that gain may be classified as Section 1250 unrecaptured depreciation, taxed at a maximum rate of 25%. This rate is also unchanged for 2026.
The remaining gain (after the 25% recapture portion) is taxed at the standard long-term rates of 0%, 15%, or 20%.
Short-Term Gains
Short-term capital gains (assets held one year or less) are taxed as ordinary income. For 2026, that means rates from 10% to 37% depending on your bracket.
The 0% Rate: A Powerful Planning Opportunity
The 0% long-term capital gains rate is one of the most underutilized planning tools available. For 2026:
- A single filer with taxable income below $49,700 pays zero federal tax on long-term capital gains
- A married couple with taxable income below $99,400 also pays zero
This creates an opportunity for retirees, early-retirees (FIRE community), and lower-income investors to harvest gains tax-free. If your taxable income is low enough, you can sell appreciated stock, recognize the gain, and immediately repurchase — resetting your cost basis with no tax cost.
Caution: Be careful not to let the capital gain itself push your income over the 0% threshold. The gains are “stacked on top” of your ordinary income when determining which rate applies.
Holding Period Planning
The difference between a short-term and long-term gain can be dramatic:
| Gain Amount | Short-Term (22% bracket) | Long-Term (15% rate) | Tax Savings |
|---|---|---|---|
| $10,000 | $2,200 | $1,500 | $700 |
| $50,000 | $11,000 | $7,500 | $3,500 |
| $100,000 | $22,000 | $15,000 | $7,000 |
If you are approaching the one-year mark on a profitable position, the tax math often strongly favors waiting.
State Capital Gains Taxes
Federal capital gains rates are only part of the story. Most states tax capital gains as ordinary income, with rates ranging from 0% (no income tax states like Florida and Texas) to over 13% (California). When evaluating a sale, always factor in your state’s treatment of capital gains alongside the federal calculation.
Key Takeaway
The 2026 capital gains thresholds reflect a modest ~2.8% inflation adjustment, expanding each rate band slightly. The most actionable opportunities are at the margins: investors near the 0% threshold should calculate whether they can harvest gains tax-free, those approaching the 15%/20% boundary may benefit from timing large sales, and high earners should factor in the 3.8% NIIT when projecting after-tax returns. Long-term gains are still taxed far more favorably than ordinary income — use the holding period to your advantage.