Long-term capital gains tax rates in the United States are 0%, 15%, or 20% at the federal level, and which one you pay depends on your total taxable income and filing status. These rates apply only to assets you held for more than one year before selling at a profit. A separate 3.8% Net Investment Income Tax can stack on top for higher earners, pushing the effective top federal rate to 23.8%. A few asset types carry their own maximum rates that override the standard tiers.
The One-Year Holding Rule
Long-term treatment requires holding the asset for more than one year. The IRS starts counting the day after you acquire it and stops on the day you sell.1Internal Revenue Service. Reporting Capital Gains Buy stock on March 15, 2025, and you need to wait until at least March 16, 2026, to sell it as a long-term gain.2Office of the Law Revision Counsel. 26 U.S.C. 1222 – Other Terms Relating to Capital Gains and Losses
Sell a day early and the whole gain is taxed as ordinary income, at rates that reach 37%. The same rule applies uniformly to stocks, bonds, real estate, and other capital assets.
2026 Long-Term Capital Gains Brackets
The IRS adjusts the brackets each year for inflation. For the 2026 tax year, the thresholds come from Revenue Procedure 2025-32.3Internal Revenue Service. Rev. Proc. 2025-32
You pay 0% on long-term gains if your total taxable income stays at or below:
- Single: $49,450
- Married filing jointly: $98,900
- Head of household: $66,200
- Married filing separately: $49,450
The 15% rate covers taxable income above the 0% ceiling up to:
- Single: $545,500
- Married filing jointly: $613,700
- Head of household: $579,600
- Married filing separately: $306,850
The 20% rate applies only to income above the 15% ceiling.3Internal Revenue Service. Rev. Proc. 2025-32
One detail catches people off guard: “taxable income” here means your total taxable income, not just the gain itself. Wages, business income, and other sources all count when deciding which bracket the gain falls into. A gain that would be tax-free for a retiree on modest Social Security can cost 15% or 20% for someone earning a high salary.
The 3.8% Net Investment Income Tax
A separate surtax adds 3.8% on top of the standard rates for higher earners. The Net Investment Income Tax applies when modified adjusted gross income exceeds $200,000 for single filers or $250,000 for married couples filing jointly.4Office of the Law Revision Counsel. 26 U.S.C. 1411 – Imposition of Tax These thresholds are not adjusted for inflation and have been fixed since the tax took effect in 2013, so more filers cross them each year.
The surtax is calculated on the lesser of your net investment income or the amount your income exceeds the threshold. Investment income includes interest, dividends, rental income, and capital gains. Distributions from retirement accounts such as a 401(k) or IRA are excluded.4Office of the Law Revision Counsel. 26 U.S.C. 1411 – Imposition of Tax When it applies, the surtax stacks with the base rate, producing effective federal rates of 18.8% or 23.8%.
Assets That Don’t Follow the 0/15/20 Structure
Several categories carry their own maximum rates.
Collectibles
Long-term gains on collectibles are taxed at a maximum rate of 28%. The IRS defines collectibles to include artwork, antique rugs, rare coins, stamps, precious metals such as gold and silver bullion, and alcoholic beverages.5Internal Revenue Service. Topic No. 409, Capital Gains and Losses If your ordinary income rate sits below 28%, you pay the lower rate instead. Investors who hold gold ETFs backed by physical bullion often don’t realize those gains also fall under the 28% collectibles rate rather than the standard 15% or 20%.
Depreciation Recapture on Real Estate
When you sell rental or investment property, the portion of the gain tied to depreciation you claimed in prior years is taxed at a maximum of 25%. This is called unrecaptured Section 1250 gain.6Internal Revenue Service. 26 CFR Part 1 – Capital Gains, Installment Sales, Unrecaptured Section 1250 Gain Any appreciation beyond the depreciation amount still qualifies for the standard long-term rates.
Qualified Small Business Stock
Section 1202 lets you exclude a portion of gain on qualified small business stock (QSBS) issued by an eligible C corporation with gross assets under $50 million. The exclusion can reach 100%.7Office of the Law Revision Counsel. 26 U.S.C. 1202 – Partial Exclusion for Gain From Certain Small Business Stock
For stock acquired after July 4, 2025, the holding period was shortened from five years to three years, with the exclusion phasing in:
- Held 3 to 4 years: 50% excluded
- Held 4 to 5 years: 75% excluded
- Held 5 or more years: 100% excluded
Stock acquired on or before July 4, 2025, still needs the original five-year hold for the full exclusion.7Office of the Law Revision Counsel. 26 U.S.C. 1202 – Partial Exclusion for Gain From Certain Small Business Stock The per-issuer cap is the greater of $10 million or ten times your adjusted basis.
Figuring the Gain the Rate Applies To
The rate is only half the calculation. The other half is the number the rate multiplies.
Cost Basis
Your taxable gain is the sale price minus your adjusted cost basis. Basis starts with what you paid for the asset, including transaction costs such as brokerage commissions. For real estate, improvements that add value, like a new roof, an added bathroom, or a kitchen remodel, increase basis and reduce the eventual gain. Routine maintenance and repairs do not.
Netting Gains and Losses
Losses in the same tax year offset gains dollar for dollar. Gain $20,000 on one investment and lose $8,000 on another, and you owe tax on $12,000. If losses exceed gains, you can deduct up to $3,000 of the net loss against ordinary income, or $1,500 if married filing separately.8Office of the Law Revision Counsel. 26 U.S.C. 1211 – Limitation on Capital Losses
Anything beyond that $3,000 carries forward indefinitely to future years.9Office of the Law Revision Counsel. 26 U.S.C. 1212 – Capital Loss Carrybacks and Carryovers A $50,000 loss taken in a bad year can shelter gains for many years afterward. The carryforward keeps its character as short-term or long-term, so it offsets the same type of gain first.
The Wash Sale Rule
Sell a stock at a loss and buy back the same or a substantially identical security within 30 days before or after the sale, and the IRS disallows the loss.10Office of the Law Revision Counsel. 26 U.S.C. 1091 – Loss From Wash Sales of Stock or Securities The window is a full 61-day period centered on the sale date. The disallowed loss is added to the basis of the replacement shares rather than lost outright, but you can’t claim it right away. The rule covers stocks, bonds, ETFs, and mutual funds. It does not currently cover cryptocurrency.
Selling Your Home
The home-sale exclusion often removes long-term rates from the picture entirely. You can exclude up to $250,000 of gain on the sale of your principal residence, or up to $500,000 if you’re married and file jointly.11Internal Revenue Service. Topic No. 701, Sale of Your Home The excluded gain does not count as taxable income at all.
To qualify, you must meet two tests during the five-year period ending on the sale date:12Office of the Law Revision Counsel. 26 U.S.C. 121 – Exclusion of Gain From Sale of Principal Residence
- Ownership test: You owned the home for at least two of those five years.
- Use test: You lived in it as your main home for at least two of those five years.
The two years don’t need to be consecutive, and the ownership and use periods don’t have to overlap. For joint filers claiming the $500,000 exclusion, only one spouse needs to satisfy the ownership test, but both must meet the use test. You also can’t have used the exclusion on another home sale within the prior two years.11Internal Revenue Service. Topic No. 701, Sale of Your Home
Inherited Versus Gifted Assets
How you received an asset changes the gain calculation dramatically. The rules for inherited and gifted property run in almost opposite directions.
Inherited: Stepped-Up Basis
When you inherit an asset, its basis resets to the fair market value on the date of the original owner’s death.13Office of the Law Revision Counsel. 26 U.S.C. 1014 – Basis of Property Acquired From a Decedent If a parent bought stock for $10,000 decades ago and it was worth $200,000 at their death, your basis is $200,000. Sell for $205,000 and you owe tax on $5,000. All the appreciation during the parent’s lifetime is wiped clean for tax purposes.
Inherited property also qualifies for long-term treatment automatically, even if you sell within a year of the death.14Office of the Law Revision Counsel. 26 U.S.C. 1223 – Holding Period of Property The step also works downward: if the asset lost value, basis steps down to the lower market value at death.
Gifted: Carryover Basis
Gifts during the donor’s lifetime work differently. You take the donor’s original basis, whatever they paid for the asset.15Office of the Law Revision Counsel. 26 U.S.C. 1015 – Basis of Property Acquired by Gifts and Transfers in Trust If your parent paid $10,000 for stock and gifted it to you when it was worth $200,000, your basis is still $10,000. Sell for $205,000 and you owe tax on $195,000. The donor’s holding period carries over as well, so the gift usually qualifies for long-term rates.14Office of the Law Revision Counsel. 26 U.S.C. 1223 – Holding Period of Property
On the same $200,000 asset, the difference between inheriting and receiving a gift can easily be $30,000 or more in federal tax.
State Taxes on Top of the Federal Rate
Federal rates aren’t the whole bill. Most states tax capital gains as ordinary income, with rates ranging from roughly 2% to over 13% depending on where you live. A handful of states have no income tax at all, so residents pay only the federal rate. State rules also vary on whether they follow the same exclusions and deductions as federal law, which means the combined effective rate on a gain can look very different from one state to the next.