When you sell stock you’ve held for more than a year, the federal long-term stock sale tax rates are 0%, 15%, or 20%, and which one applies depends on your total taxable income and filing status. A single filer in 2026 pays 0% on long-term gains if taxable income stays at or below $49,450, 15% through the middle range, and 20% only once taxable income clears $545,500.1Internal Revenue Service. Rev. Proc. 2025-32 Higher earners may owe an additional 3.8% Net Investment Income Tax on top, which can push the effective federal rate to 23.8%.
You Have to Hold the Stock More Than One Year
The lower rates apply only if you owned the stock for more than a year before selling. The clock starts the day after you buy and runs through the day you sell.2Office of the Law Revision Counsel. 26 USC 1222 – Other Terms Relating to Capital Gains and Losses Shares bought on March 1, 2025 are eligible for long-term treatment starting March 2, 2026. A sale on March 1 is exactly one year and doesn’t qualify.
Miss the cutoff by a day and the entire gain is taxed as a short-term gain at ordinary income rates, which run from 10% to 37% for 2026.3Internal Revenue Service. Topic No. 409, Capital Gains and Losses For someone in the 32% or 37% bracket, the difference on the same stock can be tens of thousands of dollars. When a position is close to its one-year anniversary, waiting a few extra days almost always pays.
The date the IRS counts is the trade execution date, not the settlement date a day or two later. Your brokerage confirmation shows both; use the trade date.
Inherited Shares Are Automatically Long-Term
If you inherit stock, it’s treated as long-term regardless of how long the person who left it to you owned it, and regardless of how quickly you sell.4Office of the Law Revision Counsel. 26 USC 1223 – Holding Period of Property The basis also resets to the fair market value on the date of death, so you’re only taxed on appreciation after you inherit.5Office of the Law Revision Counsel. 26 USC 1014 – Basis of Property Acquired From a Decedent A stock a parent bought at $10 that was worth $100 on the date of death gives you a $100 basis; selling at $105 produces a $5 long-term gain.
2026 Long-Term Capital Gains Brackets
The three rates and the taxable income thresholds for 2026 are:1Internal Revenue Service. Rev. Proc. 2025-32
- 0% rate: taxable income up to $49,450 single, $98,900 married filing jointly, $66,200 head of household, $49,450 married filing separately.
- 15% rate: $49,451 to $545,500 single, $98,901 to $613,700 married filing jointly, $66,201 to $579,600 head of household, $49,451 to $306,850 married filing separately.
- 20% rate: above $545,500 single, $613,700 married filing jointly, $579,600 head of household, $306,850 married filing separately.
These figures are adjusted for inflation each year. The IRS publishes the updated numbers in a revenue procedure, typically in the fall before the tax year begins.
How the Gain Stacks on Top of Your Other Income
A common misread of the brackets is that one rate applies to your whole gain. It doesn’t. Long-term gains sit on top of your ordinary income for the purpose of finding the right bracket. Say you’re single with $40,000 of taxable ordinary income and a $20,000 long-term gain. The first $9,450 of the gain fills the space up to the $49,450 threshold and is taxed at 0%. The remaining $10,550 crosses into the 15% bracket. You don’t pay 15% on the entire $20,000 just because your combined total pushed above the line. Many people with moderate incomes end up with a blended rate below the bracket headline.
The 3.8% Net Investment Income Tax
Higher earners owe an extra 3.8% on capital gains through the Net Investment Income Tax. The surtax applies to the smaller of your net investment income or the amount by which your modified adjusted gross income exceeds a fixed threshold.6Office of the Law Revision Counsel. 26 U.S. Code 1411 – Imposition of Tax The thresholds:
- Single or head of household: $200,000
- Married filing jointly: $250,000
- Married filing separately: $125,000
These thresholds are not indexed for inflation. Congress set them as fixed dollar amounts when the tax took effect in 2013, so each year the surtax reaches more taxpayers.7Internal Revenue Service. Questions and Answers on the Net Investment Income Tax Someone already in the 20% capital gains bracket sees an effective federal rate of 23.8%. Someone in the 15% bracket can still owe 18.8% if income is high enough to trigger NIIT.
Losses Reduce the Gain You’re Taxed On
Sales at a loss during the same year cut down the gains you owe tax on. Long-term losses offset long-term gains first, short-term losses offset short-term gains first, and anything left over crosses to the other category. If total losses exceed total gains, you can deduct up to $3,000 of the net loss against ordinary income ($1,500 if married filing separately).8Office of the Law Revision Counsel. 26 USC 1211 – Limitation on Capital Losses
Losses beyond that annual cap carry forward indefinitely, reducing gains or ordinary income in later years until fully used. The IRS doesn’t track the carryover for you. The Capital Loss Carryover Worksheet in the Schedule D instructions walks through the math.
What Counts as the Taxable Gain
Your taxable gain is the sale price minus your cost basis. The basis starts with what you paid for the shares, but commissions, transfer fees, and other acquisition costs get added in, which lowers the eventual gain.9Internal Revenue Service. Publication 550, Investment Income and Expenses Buying 100 shares at $50 with a $10 commission gives you a basis of $5,010, not $5,000.
If you’ve bought the same stock in multiple lots at different prices, the basis on a partial sale depends on which shares you’re treated as selling. Most brokerages default to first-in, first-out. You can instead use specific identification and pick the shares yourself, but the designation has to happen at the time of sale and be confirmed by the broker. Choosing higher-basis shares reduces the gain and the tax on it.
Your brokerage reports both the proceeds and, for shares bought after certain cutoff dates, the cost basis on Form 1099-B.10Internal Revenue Service. About Form 1099-B, Proceeds From Broker and Barter Exchange Transactions Check the basis figure. Brokerages get it wrong from time to time, especially on shares transferred between firms, stock splits, or reinvested dividends. The IRS receives the same 1099-B, so a mismatch is one of the fastest ways to trigger a notice.
State Tax Sits on Top of the Federal Rate
The federal rate is only part of what you’ll owe. Most states tax long-term capital gains as regular income, so the state rate stacks on the federal. A few states have no income tax; others charge rates above 10%. Combined federal and state burdens on a long-term gain can run from under 15% to over 33% depending on where you live and how much you earn. If you’re timing a large sale or thinking about moving, that difference belongs in the calculation.
A Big Sale May Require an Estimated Tax Payment
A large gain in the middle of the year can create a tax bill you’re expected to pay before April. You generally owe estimated payments if you’ll owe at least $1,000 after withholding and credits, and your withholding will cover less than 90% of the current year’s tax or 100% of last year’s tax (110% if your adjusted gross income was over $150,000).11Internal Revenue Service. Large Gains, Lump Sum Distributions, Etc.
Missing an estimated payment deadline triggers an underpayment penalty that accrues like interest, and it applies even if you end the year owed a refund. The IRS expects the money in the quarter you received the income. If you sell in June and owe $15,000, waiting until the following April has a cost. Form 1040-ES calculates and submits quarterly payments; alternatively, ask your employer to bump payroll withholding for the rest of the year to cover the gap.