Do You Pay Capital Gains Tax After Age 65? Brackets and Breaks

Yes, you still pay capital gains tax after age 65. The tax code contains no age-based exemption, and the IRS taxes the profit on a sale the same way whether you are 30 or 80.¹ What changes in retirement is usually your income, and lower income can put a surprising amount of your investment gains into the zero-percent long-term capital gains bracket. Several deductions available only to older filers make that outcome more likely, which is probably where the myth of a senior exemption started.

The rules that matter most are the holding period, the bracket structure for long-term gains, and a handful of provisions that either lower your taxable income or exclude certain sales from tax altogether. Knowing how they fit together is the difference between paying nothing on a profitable sale and handing over thousands you did not need to.

Short-Term and Long-Term Gains Are Taxed Differently

If you sell an asset you have held for one year or less, the profit is a short-term gain and is taxed at your ordinary income rate, which for 2026 can reach 37 percent.² Hold for more than a year, and the gain is long-term, with a maximum rate of 20 percent for most assets.¹ Most retirees selling stocks or funds they have owned for years or decades are already in long-term territory.

One boundary to know: long-term gains on collectibles such as coins, art, and antiques can be taxed at up to 28 percent rather than the usual 20 percent ceiling.¹ That higher rate applies regardless of your income.

The 2026 Long-Term Capital Gains Brackets

Long-term capital gains have their own brackets, and your total taxable income for the year (including the gains) decides which rate you pay. For 2026:

0 percent on long-term gains if taxable income is up to $49,450 (single) or $98,900 (married filing jointly).
15 percent on long-term gains above those thresholds through $545,500 (single) or $613,700 (joint).
20 percent on long-term gains above the 15 percent ceiling.³

The zero-percent bracket is the one retirees should focus on. A married couple filing jointly with $98,900 or less in taxable income can sell long-term investments and owe no federal tax on the gain. Many seniors living on Social Security and modest retirement income sit comfortably inside that range once deductions are applied.

Higher-income retirees face an added 3.8 percent Net Investment Income Tax on capital gains and other investment income once modified adjusted gross income tops $200,000 (single) or $250,000 (joint). Those thresholds are not indexed for inflation.⁴

Senior Deductions Push More Gains Into the Zero Bracket

Because long-term capital gains rates depend on taxable income, every dollar of deduction can move a dollar of gain into a lower bracket. Filers 65 and older get more deduction than younger filers, and for 2025 through 2028 they get considerably more.

For 2026, the base standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly. On top of that, each person 65 or older adds $2,050 if single or $1,650 if married.³ A married couple both 65 or older gets a total standard deduction of $35,500 before anything else.

The One, Big, Beautiful Bill added a separate enhanced deduction of $6,000 per person 65 or older, effective for tax years 2025 through 2028. A qualifying couple can claim $12,000. It stacks on top of the base standard deduction and the age-based addition. The enhanced deduction phases out for single filers with modified adjusted gross income above $75,000 and joint filers above $150,000.⁵

Put those together, and a single filer 65 or older with income under $75,000 could see a total standard deduction of $24,150 ($16,100 base plus $2,050 age addition plus $6,000 enhanced), sheltering enough income that more of any long-term gain lands in the zero-percent bracket.

Selling Your Home After 65

The largest single sale most retirees ever make is their house, and it comes with its own exclusion. Under Section 121, a single homeowner can exclude up to $250,000 of profit from the sale of a primary residence, and married couples filing jointly can exclude up to $500,000. To qualify, you must have owned the home and used it as your primary residence for at least two of the five years before the sale, and the two years do not have to be consecutive.⁶

A couple who bought their home in 1990 for $150,000 and sells in 2026 for $550,000 has a $400,000 gain that falls entirely within the $500,000 joint exclusion. They owe nothing on it.

If You Move Into a Care Facility Before Selling

Seniors who move into assisted living or a nursing home before selling can fail the use test through no fault of their own. The statute addresses this. If you become physically or mentally unable to care for yourself, you only need to have lived in the home for one year out of the five-year window, and time spent in a state-licensed care facility while you still own the home counts as time using it as your residence.⁷ Documentation of the medical condition and the facility admission matters here.

Capital Gains Can Trigger Two Other Costs

A capital gain does not sit quietly on your return. It flows into other calculations that can raise your total tax bill in ways the gain rate alone does not show.

More of Your Social Security Becomes Taxable

The IRS uses a “combined income” formula (half your Social Security benefits plus all your other income, including capital gains) to decide how much of your Social Security is taxable.⁸

Single filers: combined income between $25,000 and $34,000 makes up to 50 percent of benefits taxable; above $34,000, up to 85 percent.
Married filing jointly: combined income between $32,000 and $44,000 makes up to 50 percent of benefits taxable; above $44,000, up to 85 percent.⁸

Those thresholds have not been adjusted for inflation since 1984 and 1993. A one-time stock sale that lifts your combined income across the $34,000 or $44,000 line can make 85 percent of your Social Security taxable for that entire year.

Medicare Premiums Can Jump

Medicare Part B and Part D premiums are income-tested through the Income-Related Monthly Adjustment Amount, or IRMAA. For 2026, the standard Part B premium is $202.90 per month. Single filers with MAGI above $109,000 or joint filers above $218,000 begin paying surcharges that can push total Part B as high as $689.90 per month.⁹

Medicare uses a two-year lookback. Your 2026 premiums are based on your 2024 return. A large sale in one year can raise premiums two years later, long after the tax on the gain itself has been paid.

Inherited Assets Reset at Death

If you inherit an asset, its cost basis resets to the fair market value on the date of death.¹⁰ All the appreciation that built up during the previous owner’s life disappears for capital gains purposes.

Say a parent bought stock in 1985 for $10,000 and it is worth $200,000 at death. If the parent had sold it, tax would have been owed on $190,000 of gain. An heir who inherits the same shares receives a $200,000 basis and can sell immediately with no gain.¹¹

In community property states such as California and Texas, both halves of jointly owned assets receive the step-up when one spouse dies, which doubles the benefit compared with common-law states where only the deceased spouse’s share is adjusted.

Ways to Reduce What You Owe

Fill the Zero-Percent Bracket On Purpose

If your taxable income leaves room inside the zero-percent long-term bracket, you can sell appreciated assets up to that ceiling and owe no federal capital gains tax. A married couple with $60,000 in other taxable income has roughly $38,900 of headroom under the $98,900 joint threshold for 2026.³ You can immediately repurchase the same investment, which resets your basis higher and reduces future gains.

Spread a Large Sale Across Tax Years

Breaking a big sale into pieces across two or three calendar years keeps annual gains smaller, which makes the zero or 15 percent bracket easier to hit and reduces the chance of triggering Social Security taxation or an IRMAA surcharge.

Offset Gains With Losses

Selling losing positions in the same year as winners offsets the gains dollar for dollar. If losses exceed gains, you can deduct up to $3,000 of the remaining net loss against ordinary income each year and carry the rest forward indefinitely.¹

Give Appreciated Shares Instead of Cash

If you already plan to give to charity, donating appreciated stock or fund shares held more than a year lets you skip the capital gains tax on the appreciation while claiming a deduction for the full fair market value.

Hold the Most Appreciated Assets for Your Heirs

Because of the step-up in basis, assets you leave behind reset to fair market value at your death. Given a choice between selling a stock with a $5,000 basis and one with a $50,000 basis when both are worth $60,000, selling the higher-basis position produces only $10,000 of gain. Passing the low-basis position to heirs eliminates $55,000 of embedded gain permanently.¹⁰

1
Internal Revenue Service. Topic No. 409, Capital Gains and Losses
2
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
3
IRS. Revenue Procedure 2025-32, 2026 Adjusted Items
4
Internal Revenue Service. Net Investment Income Tax
5
Internal Revenue Service. Check Your Eligibility for the New Enhanced Deduction for Seniors
6
Office of the Law Revision Counsel. 26 USC 121 – Exclusion of Gain From Sale of Principal Residence
7
Office of the Law Revision Counsel. 26 USC 121 – Exclusion of Gain From Sale of Principal Residence
8
Internal Revenue Service. IRS Reminds Taxpayers Their Social Security Benefits May Be Taxable
9
Centers for Medicare & Medicaid Services. 2026 Medicare Parts A and B Premiums and Deductibles
10
Office of the Law Revision Counsel. 26 U.S. Code 1014 – Basis of Property Acquired From a Decedent
11
Internal Revenue Service. Gifts and Inheritances