Long-term capital gains tax rates are 0, 15, or 20 percent at the federal level, and which one applies depends on your total taxable income for the year and your filing status. A gain is long-term if you held the asset for more than one year before selling it. For the 2026 tax year, a single filer pays nothing on long-term gains as long as taxable income stays at or below $49,450, and a married couple filing jointly gets the same zero rate up to $98,900. Above those thresholds, gains are taxed at 15 percent until income clears a much higher second threshold, where the rate steps up to 20 percent. Two additional wrinkles change the picture for some taxpayers: a 3.8 percent surtax on investment income for higher earners, and a separate 28 percent maximum rate on collectibles.
What Counts as Long-Term
The tax code draws a hard line at one year. Sell a capital asset after holding it for more than 12 months and any profit qualifies for the reduced long-term rates. Sell at the one-year mark or sooner and the profit is short-term, taxed at the same rates as your wages.1Office of the Law Revision Counsel. 26 U.S. Code 1222 – Other Terms Relating to Capital Gains and Losses Your holding period starts the day after you buy the asset and runs through the day you sell. Something bought on March 1, 2025 becomes long-term on March 2, 2026.
Short-term gains can reach 37 percent. Long-term gains top out at 20 percent for most assets, and many taxpayers pay considerably less.2Internal Revenue Service. Topic No. 409, Capital Gains and Losses The rule covers stocks, bonds, mutual funds, real estate, and most other investment property.
The Three Rates for 2026
Long-term gains fall into one of three federal brackets based on your taxable income, which is what remains after you subtract either the standard deduction or itemized deductions from your adjusted gross income. For 2026, the standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for heads of household.3Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
Zero Percent
The zero rate applies if your total taxable income for 2026 does not exceed:
- $49,450 for single filers or married filing separately
- $98,900 for married filing jointly
- $66,200 for head of household
These thresholds are adjusted each year for inflation.3Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
Fifteen Percent
Once taxable income clears the zero-rate ceiling, gains are taxed at 15 percent until income reaches the next threshold. Most taxpayers with long-term gains land here.
Twenty Percent
The 20 percent rate applies in 2026 when taxable income exceeds:
- $545,500 for single filers
- $613,700 for married filing jointly
- $579,600 for head of household
- $306,850 for married filing separately
Even at this level, the higher rate applies only to the portion of income above the threshold.2Internal Revenue Service. Topic No. 409, Capital Gains and Losses
How the Gain Itself Changes Your Bracket
A detail many people miss: the capital gain is part of the taxable income calculation that determines which bracket applies to that same gain. A gain large enough to push your income above the zero-rate threshold does not lose the zero rate entirely. Only the portion above the threshold moves up to 15 percent. Some of the gain can be taxed at zero and the rest at 15 percent in the same year. The same logic applies at the boundary between 15 and 20 percent.
The 3.8 Percent Surtax on Higher Incomes
Higher earners face an extra 3.8 percent Net Investment Income Tax on top of the regular rate. 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 or head of household
- $250,000 for married filing jointly
- $125,000 for married filing separately
These thresholds are not adjusted for inflation and have been frozen since the tax took effect in 2013.4Internal Revenue Service. Questions and Answers on the Net Investment Income Tax A taxpayer in the 20 percent bracket who also owes the surtax effectively pays 23.8 percent on long-term gains, the highest combined federal rate.5Office of the Law Revision Counsel. 26 U.S. Code 1411 – Imposition of Tax
Collectibles Are Taxed at Up to 28 Percent
Long-term gains on collectibles such as art, coins, antiques, and precious metals do not get the 15 or 20 percent preferential rates. They face a maximum rate of 28 percent instead. If your ordinary tax bracket is lower than 28 percent, you pay your regular rate.2Internal Revenue Service. Topic No. 409, Capital Gains and Losses Investors who assume every long-term asset gets the same treatment sometimes underpay their quarterly estimates on collectible sales.
Ways to Lower the Bill
Home Sale Exclusion
Selling your primary residence lets you exclude up to $250,000 of gain from income as a single filer, or up to $500,000 filing jointly with your spouse.6Internal Revenue Service. Topic No. 701, Sale of Your Home The exclusion applies before the rate brackets, and you do not need to reinvest the proceeds. To qualify, you must have owned the home for at least two of the five years before the sale and lived in it as your primary residence for at least two of those five years. The two periods don’t need to overlap, and the residence time doesn’t need to be continuous as long as it totals at least 730 days within the five-year window.7Internal Revenue Service. Publication 523, Selling Your Home
Stepped-Up Basis on Inherited Property
When you inherit property, its tax basis resets to the fair market value on the date the previous owner died. If a parent bought stock for $10,000 and it was worth $100,000 when they passed away, your basis is $100,000. Sell it for $102,000 and the taxable gain is $2,000, not $92,000.8Office of the Law Revision Counsel. 26 U.S. Code 1014 – Basis of Property Acquired From a Decedent Inherited property also gets an automatic long-term holding period, so it qualifies for long-term rates even if you sell it days after receiving it.9Office of the Law Revision Counsel. 26 U.S. Code 1223 – Holding Period of Property
Offsetting With Capital Losses
Investment losses are one of the most direct ways to shrink the bill. Losses first offset gains of the same type: short-term against short-term, long-term against long-term. Any remaining losses then cross over to the other category. If total losses exceed total gains for the year, you can deduct up to $3,000 of the excess against ordinary income, or $1,500 if married filing separately.10Office of the Law Revision Counsel. 26 U.S. Code 1211 – Limitation on Capital Losses Unused losses carry forward indefinitely.2Internal Revenue Service. Topic No. 409, Capital Gains and Losses
Watch the wash sale rule. If you sell a security at a loss and buy a substantially identical one within 30 days before or after the sale, the IRS disallows the loss deduction for that year. The disallowed amount gets added to the basis of the replacement shares.11Office of the Law Revision Counsel. 26 U.S. Code 1091 – Loss From Wash Sales of Stock or Securities Waiting at least 31 days before repurchasing avoids the problem.
Reporting the Gain
Brokerage firms send Form 1099-B after year-end listing each sale with the proceeds, purchase and sale dates, and usually the cost basis.12Internal Revenue Service. About Form 1099-B, Proceeds From Broker and Barter Exchange Transactions Your net gain on each transaction is the sale price minus your adjusted basis, which starts with what you paid (including commissions) and reflects events like stock splits, reinvested dividends, or improvements to real estate.
Individual sales get listed on Form 8949, which separates short-term from long-term transactions. The totals flow to Schedule D of your Form 1040, where all gains and losses are combined into a single net figure for the year.13Internal Revenue Service. Instructions for Form 8949
Estimated Tax After a Big Gain
A large gain realized partway through the year can create a quarterly estimated tax obligation. The IRS expects taxes to be paid as income is earned. If you expect to owe $1,000 or more when you file, you generally need to make estimated payments using Form 1040-ES.14Internal Revenue Service. Estimated Taxes You can avoid an underpayment penalty by paying at least 90 percent of your current-year tax or 100 percent of last year’s tax, whichever is less. If your adjusted gross income exceeded $150,000 last year, the 100 percent figure rises to 110 percent.15Internal Revenue Service. Underpayment of Estimated Tax by Individuals Penalty Selling a large asset in September and waiting until April to pay generally means a penalty on the missed quarters, even if the final return shows nothing due after payment.
State Taxes Come on Top
Federal rates are only part of the picture. Most states tax capital gains as ordinary income, and rates range from zero in states with no income tax to above 13 percent in the highest-tax jurisdictions. A few states offer preferential rates or partial exclusions for long-term gains, but the majority do not. In a high-tax state, the combined federal and state rate on a large gain can exceed 35 percent for top earners.