Long-Term Capital Gains Tax Rates: 0%, 15%, or 20%

Long-term capital gains are taxed at federal long-term capital gains tax rates of 0%, 15%, or 20%, and which rate you pay depends on your taxable income and filing status. These preferential rates apply when you sell an asset you’ve held for more than one year at a profit. For the 2026 tax year, a single filer pays nothing on long-term gains if taxable income stays below $49,450, and a married couple filing jointly can earn up to $98,900 before any long-term capital gains tax kicks in.¹ Some assets face higher maximum rates, and high earners may owe an additional 3.8% surtax on top.

What Makes a Gain Long-Term

To qualify for the lower rates, you have to hold the asset for more than one year before selling. Anything sold at the one-year mark or sooner produces a short-term gain, taxed at your ordinary income rates.² The gap is large. A short-term gain can be taxed at rates as high as 37%, while the same gain held one day longer might qualify for the 15% long-term rate.

The holding period starts the day after you acquire the asset, and the day you sell counts. Buy stock on March 1, and the clock starts March 2. You’d need to wait until at least March 2 of the following year to sell and get long-term treatment.

Inherited property is a special case. It’s always treated as long-term, even if you sell it the same week you receive it.³ Inherited assets also receive a stepped-up basis equal to the fair market value on the date of the previous owner’s death, so appreciation during the decedent’s lifetime escapes tax.⁴

2026 Long-Term Capital Gains Brackets

The federal code sets three tiers: 0%, 15%, and 20%.⁵ Which one applies depends on your total taxable income after deductions, not the size of the gain alone. The IRS adjusts these thresholds each year. For 2026:¹

0% Rate

Single: taxable income up to $49,450
Married filing jointly: up to $98,900
Head of household: up to $66,200
Married filing separately: up to $49,450

15% Rate

Single: $49,451 to $545,500
Married filing jointly: $98,901 to $613,700
Head of household: $66,201 to $579,600
Married filing separately: $49,451 to $306,850

20% Rate

Single: over $545,500
Married filing jointly: over $613,700
Head of household: over $579,600
Married filing separately: over $306,850

How Gains Stack on Top of Ordinary Income

A common misconception is that capital gains have their own separate bracket system. They don’t. Your long-term gains sit on top of your ordinary income when the rate is figured. Wages, interest, and other ordinary income fill up the bracket space first, and your capital gains start where that ordinary income left off.⁵

Here’s what that looks like. Say you’re a single filer in 2026 with $40,000 in ordinary taxable income and $20,000 in long-term capital gains. Your ordinary income uses $40,000 of the 0% bracket space, leaving $9,450 of room before you hit the $49,450 threshold. The first $9,450 of your gain is taxed at 0%, and the remaining $10,550 is taxed at 15%. A single sale can end up split across two rates when your ordinary income puts you near a bracket boundary. That’s why timing matters: shifting a sale to a year when your ordinary income runs lower can pull more of the gain into the 0% bracket.

Assets That Don’t Get the Standard Rates

Not every long-term gain uses the 0/15/20% structure. A few categories carry different maximum rates.

Collectibles

Long-term gains on collectibles are taxed at a maximum rate of 28%. That covers artwork, antiques, stamps, rare coins, precious metals, and similar items.⁵ If your ordinary income puts you in a bracket below 28%, you pay your actual marginal rate instead. Gold and silver ETFs that hold physical metal often fall into this category, which surprises some investors.

Depreciated Real Estate

When you sell rental or business property you’ve been depreciating, the portion of your gain attributable to prior depreciation is taxed at a maximum of 25%. This is called unrecaptured Section 1250 gain. Any gain above your original purchase price still qualifies for the standard 0/15/20% rates.⁶

Qualified Small Business Stock

Stock in a qualifying small business under Section 1202 can receive a partial or full exclusion from capital gains tax. For stock acquired after September 27, 2010, and held at least five years, the exclusion is 100% up to certain limits, meaning the gain is completely tax-free. Older stock qualifies for a 50% or 75% exclusion depending on the acquisition date.⁷ The company must be a domestic C corporation with gross assets under $50 million when the stock was issued.

Qualified Dividends

Qualified dividends aren’t capital gains, but the code taxes them at the same 0%, 15%, or 20% rates using the same bracket thresholds.⁵ Most dividends from U.S. corporations and many foreign corporations qualify, as long as you’ve held the stock for a minimum period.

The 3.8% Surtax for Higher Earners

On top of the standard rates, an additional 3.8% Net Investment Income Tax applies to higher-income taxpayers. The surtax is calculated on the lesser of your net investment income or the amount your modified adjusted gross income exceeds these thresholds:⁸

Single or head of household: $200,000
Married filing jointly: $250,000
Married filing separately: $125,000

These thresholds aren’t adjusted for inflation and have stayed the same since the tax took effect in 2013, so more taxpayers get pulled in each year as incomes rise.⁹ A married couple in the 20% bracket with MAGI above $250,000 effectively pays 23.8% on their long-term gains. The tax gets reported on Form 8960.¹⁰

Offsetting Gains With Losses

You don’t pay tax on the full amount of every profitable sale. The IRS requires you to net gains and losses first. Short-term gains and losses are netted together, long-term gains and losses are netted separately, and then the two results combine into your overall capital gain or loss for the year.⁶

If losses exceed gains, you can deduct up to $3,000 of the net loss against ordinary income ($1,500 if married filing separately). Anything left over carries forward indefinitely to offset gains in future years.¹¹

One netting detail worth knowing: net short-term gains are taxed as ordinary income, not at the preferential long-term rates. Only net long-term gains get the 0/15/20% treatment.

Home Sale Exclusion

The biggest capital gains break most people ever use is the exclusion for selling a primary residence. If you’ve owned and lived in your home for at least two of the five years before the sale, you can exclude up to $250,000 in gain from your income. Married couples filing jointly can exclude up to $500,000.¹² The two years don’t need to be consecutive.

For the joint exclusion, both spouses must meet the use requirement and at least one must meet the ownership requirement, and you can’t have claimed the exclusion on another home sale within the previous two years. A reduced exclusion may be available if you fall short because of a job relocation, health issue, or certain unforeseen circumstances.

State Taxes Are Separate

Federal rates are only part of the picture. Most states tax capital gains as ordinary income, so your state rate on gains matches whatever the state charges on wages. A handful of states tax long-term gains at a lower rate than ordinary income, and states without an income tax generally don’t tax capital gains at all. Depending on where you live, state tax could add anywhere from nothing to over 13% on top of your federal bill.

1
Internal Revenue Service. Revenue Procedure 2025-32
2
Office of the Law Revision Counsel. 26 USC 1222 – Other Terms Relating to Capital Gains and Losses
3
Office of the Law Revision Counsel. 26 USC 1223 – Holding Period of Property
4
Office of the Law Revision Counsel. 26 USC 1014 – Basis of Property Acquired From a Decedent
5
Office of the Law Revision Counsel. 26 USC 1 – Tax Imposed
6
Internal Revenue Service. Topic No. 409, Capital Gains and Losses
7
Office of the Law Revision Counsel. 26 USC 1202 – Partial Exclusion for Gain From Certain Small Business Stock
8
Office of the Law Revision Counsel. 26 US Code 1411 – Imposition of Tax
9
Congressional Research Service. The 3.8% Net Investment Income Tax: Overview, Data, and Policy
10
Internal Revenue Service. Instructions for Form 8960
11
Office of the Law Revision Counsel. 26 USC 1212 – Capital Loss Carrybacks and Carryovers
12
Office of the Law Revision Counsel. 26 USC 121 – Exclusion of Gain From Sale of Principal Residence