Capital gains tax income limits for 2026 sort long-term gains into three federal rate tiers: a single filer pays 0% on gains while total taxable income stays at or below $49,450, 15% on income from $49,451 through $545,500, and 20% above that. Married couples filing jointly get roughly double those thresholds. A separate 3.8% surcharge applies once modified adjusted gross income passes $200,000 for singles or $250,000 for joint filers. The limits that matter to you depend on your filing status, how long you held the asset, and how the gain stacks on top of your other income.
2026 Long-Term Capital Gains Brackets by Filing Status
Assets held longer than a year qualify for the preferential long-term rates. The inflation-adjusted thresholds for the 2026 tax year are:1Tax Foundation. 2026 Tax Brackets and Federal Income Tax Rates
- Single filers: 0% on taxable income up to $49,450; 15% from $49,451 to $545,500; 20% above $545,500.
- Married filing jointly: 0% up to $98,900; 15% from $98,901 to $613,700; 20% above $613,700.
- Head of household: 0% up to $66,200; 15% from $66,201 to $579,600; 20% above $579,600.
- Married filing separately: 0% up to $49,450; 15% from $49,451 to $306,850; 20% above $306,850.
Qualifying surviving spouses use the joint brackets. Because these dollar amounts adjust annually for inflation, they creep up each year rather than pulling more gains into higher tiers as prices rise.
The rates work bracket by bracket, not as a cliff. If you’re single with $60,000 in taxable income, the first $49,450 still sits in the 0% tier and only the amount above it gets taxed at 15%. Crossing a threshold doesn’t retroactively tax everything at the higher rate.
How Your Other Income Changes the Limit That Applies to You
The thresholds apply to total taxable income, not just to the profit from a sale. Ordinary income (wages, self-employment earnings, retirement distributions) fills the brackets first, and long-term gains stack on top.
Say you’re a single filer with $45,000 in wages and $20,000 in long-term gains. Your wages occupy the first $45,000 of bracket space. The first $4,450 of gain fits under the $49,450 line and pays 0%. The remaining $15,550 of gain pays 15%. A raise, a bonus, or a freelance check can crowd out the 0% room and push more of the same gain into 15% or 20% without you selling anything extra.
This stacking hits hardest near the boundary between 0% and 15%, where a small bump in ordinary income can turn a tax-free gain into a taxable one. Retirees who can time IRA withdrawals alongside asset sales have the most flexibility to keep gains in the lower tiers.
Short-Term Gains Follow the Ordinary Income Brackets
Assets held one year or less get no preferential rate. The profit is added to your wages and taxed at your ordinary rate, which runs from 10% to 37% for 2026.1Tax Foundation. 2026 Tax Brackets and Federal Income Tax Rates
The gap is sizable. A single filer with $300,000 in taxable income pays 15% on a long-term gain but could pay 24% or more on the same gain if it were short-term. At the top bracket ($640,601 and above for single filers), the comparison is 37% versus 20%. Because short-term gains count as ordinary income, they can also push your wages and other earnings into a higher bracket, compounding the hit.
Mutual fund investors sometimes get caught by the holding period rules. When a fund sells holdings inside its portfolio and passes the profit through as a capital gain distribution, that distribution is taxed as long-term regardless of how long you’ve owned the fund shares, as long as the fund itself held the underlying assets more than a year.2Fidelity. Understanding Mutual Fund Taxes The distribution counts on your return whether you took it in cash or reinvested it.
The 3.8% Net Investment Income Tax and Its Income Limits
On top of the 0%/15%/20% rates, higher earners owe an extra 3.8% on investment income. The Net Investment Income Tax applies to the smaller of your net investment income or the amount by which modified adjusted gross income exceeds these thresholds:3Office of the Law Revision Counsel. 26 US Code 1411 – Imposition of Tax
- Single or head of household: $200,000
- Married filing jointly: $250,000
- Married filing separately: $125,000
Unlike the capital gains brackets, these thresholds are not indexed for inflation.4Internal Revenue Service. Questions and Answers on the Net Investment Income Tax They’ve been at the same dollar amounts since 2013, which has gradually pulled more taxpayers into range. A married couple with $300,000 in MAGI pays the 3.8% on $50,000, the amount over the $250,000 line. Together with the 20% top rate, this brings the effective ceiling for high earners to 23.8%.
The surcharge covers more than capital gains. Interest, dividends, rental income, and royalties all count as net investment income. Nonresident aliens are exempt.5Internal Revenue Service. Instructions for Form 8960 A U.S. citizen or resident married to a nonresident alien defaults to the $125,000 separate-filer threshold unless they elect to file jointly.
Higher Ceilings for Collectibles and Depreciated Real Estate
Two asset categories don’t get the 0%/15%/20% treatment even when held long-term.6Internal Revenue Service. Topic No 409, Capital Gains and Losses
- Collectibles cap at 28%. Coins, art, antiques, precious metals, and stamps face a maximum rate of 28%. If your ordinary rate is lower, you pay the lower rate. Section 1202 small business stock that doesn’t qualify for a full exclusion also caps at 28%.
- Depreciation recapture on real estate caps at 25%. When you sell rental property or other depreciated real estate, the portion of your gain attributable to depreciation deductions you claimed is taxed at up to 25%. Any remaining gain above your original purchase price runs through the standard long-term brackets.
Real estate investors are the group most likely to be surprised. A rental bought for $300,000 with $80,000 of depreciation claimed over the years produces an $80,000 slice at sale that faces 25% even if the rest of the gain qualifies for 15%.
The Home Sale Exclusion Has No Income Limit
Selling a primary residence works differently. You can exclude up to $250,000 of profit if you file single, or up to $500,000 filing jointly, from taxable gain entirely.7Office of the Law Revision Counsel. 26 USC 121 – Exclusion of Gain From Sale of Principal Residence No income limit gates this exclusion.
To claim the full amount, you must have owned the home for at least two years and used it as your main home for at least two years during the five-year period ending on the sale date.8Internal Revenue Service. Sale of Your Home Those two-year periods don’t need to overlap. For joint filers, only one spouse has to meet the ownership test, but both must meet the use test. You generally can’t use the exclusion more than once every two years. A partial exclusion is available if you fall short because of a job change, a health issue, or other unforeseen circumstances, prorated by the fraction of the two years you actually completed. Anything above the exclusion is taxed at the standard long-term rates.
State Taxes Add On Top
Most states tax capital gains as well, with rates that vary widely. A few states impose no income tax at all; others tax gains at rates above 13%. State taxes stack on the federal rates rather than replacing them, so in a high-tax state a top earner can face a combined burden approaching or exceeding 37% once the 20% federal rate, the 3.8% NIIT, and state tax are layered together.