For the 2026 tax year, the income limit for capital gains tax at the 0% federal rate is $49,450 of taxable income for single filers and $98,900 for married couples filing jointly. Stay at or below that line and long-term gains cost you nothing in federal tax. Above it, a 15% rate applies until taxable income reaches $545,500 single or $613,700 joint, and a 20% rate takes over beyond those points. High earners can also owe an extra 3.8% surtax on investment income. These limits apply to gains on assets held longer than one year; sell sooner and different rules take over.
The Holding Period Comes First
Income limits only matter if your gain is long-term. The IRS treats a sale as long-term when you owned the asset for more than one year, counting from the day after purchase through the day of sale.1Internal Revenue Service. Topic No 409, Capital Gains and Losses Long-term gains get the 0%, 15%, and 20% rate structure below.
Sell on or before the one-year mark and the profit is a short-term gain, taxed at your ordinary income tax rates — the same rates as wages.1Internal Revenue Service. Topic No 409, Capital Gains and Losses The 0% income limit does not exist for short-term gains. Someone in the 32% ordinary bracket could save 12 to 17 percentage points by waiting one more day before selling.
2026 Income Limits by Filing Status
The IRS adjusts these thresholds each year for inflation. Rev. Proc. 2025-32 sets the 2026 figures.2Internal Revenue Service. Rev Proc 2025-32
You owe 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 gains that fall between the 0% ceiling and these upper limits:
- Single: $545,500
- Married filing jointly: $613,700
- Head of household: $579,600
- Married filing separately: $306,850
Above those upper limits, the rate is 20%.2Internal Revenue Service. Rev Proc 2025-32
The number the IRS compares to these limits is your total taxable income, not just the gain itself. That distinction changes the math in ways many sellers miss.
2025 Income Limits
If you’re still preparing a 2025 return, use these lower thresholds instead.1Internal Revenue Service. Topic No 409, Capital Gains and Losses
0% rate ceiling:
- Single and married filing separately: $48,350
- Married filing jointly: $96,700
- Head of household: $64,750
15% rate ceiling:
- Single: $533,400
- Married filing jointly: $600,050
- Head of household: $566,700
- Married filing separately: $300,000
Gains that push taxable income above the 15% ceiling are taxed at 20%.1Internal Revenue Service. Topic No 409, Capital Gains and Losses
How the Income Limit Actually Works
The rate you pay depends on where your gain sits inside your total income, not on the gain in isolation. The IRS stacks ordinary income (wages, interest, business income) at the bottom, then lays capital gains on top.3Office of the Law Revision Counsel. 26 USC 1 – Tax Imposed The 0% rate applies only to the portion of a long-term gain that fits under the threshold once your ordinary income has taken its place.
Say you’re single in 2026 with $40,000 in wages and a $20,000 long-term gain. Your wages fill the first $40,000 of taxable income. The gain stacks on top. The first $9,450 of that gain slides in under the $49,450 threshold and pays 0%. The remaining $10,550 sits above the line and pays 15%. One sale can straddle two brackets, and a bigger gain can reach all three.
Capital losses affect this calculation before rates are ever applied. Losses first offset gains of the same type, and any remainder offsets the other type; net losses beyond gains can offset up to $3,000 of ordinary income per year ($1,500 if married filing separately), with the rest carrying forward.1Internal Revenue Service. Topic No 409, Capital Gains and Losses4Office of the Law Revision Counsel. 26 USC 1211 – Limitation on Capital Losses Smaller net gain means less income to stack, which can drop you into a lower bracket.
The math lives on Schedule D of Form 1040 and the Qualified Dividends and Capital Gain Tax Worksheet in the Form 1040 instructions.5Internal Revenue Service. Instructions for Schedule D (Form 1040)
Assets the Standard Income Limits Don’t Cover
Two categories of long-term gain step outside the 0/15/20% structure and carry higher maximum rates under 26 U.S.C. § 1(h).3Office of the Law Revision Counsel. 26 USC 1 – Tax Imposed
Collectibles — art, antiques, gems, stamps, coins, and precious metals — carry a maximum long-term rate of 28%. A lower ordinary rate applies if your income is low enough, but the 0% income limit that covers stocks does not apply here.
Depreciated real estate carries a maximum rate of 25% on the portion of your gain tied to depreciation you previously claimed. Only the remaining gain, the piece above your original purchase price, follows the standard capital gains brackets.1Internal Revenue Service. Topic No 409, Capital Gains and Losses
The 3.8% Surtax and Its Separate Income Limits
An additional 3.8% Net Investment Income Tax stacks on top of your capital gains rate once your modified adjusted gross income crosses a fixed threshold.6Office of the Law Revision Counsel. 26 USC 1411 – Imposition of Tax The thresholds are:
- Single and head of household: $200,000
- Married filing jointly: $250,000
- Married filing separately: $125,000
The 3.8% applies to whichever is smaller: your net investment income or the amount your MAGI exceeds the threshold.6Office of the Law Revision Counsel. 26 USC 1411 – Imposition of Tax Net investment income includes interest, dividends, capital gains, rental income, and passive business income.
These numbers are written into the statute and have not been adjusted for inflation since the tax took effect in 2013. Each year, more taxpayers cross the line by standing still. Combine the top 20% bracket with the surtax and the effective federal maximum on a long-term gain reaches 23.8%.
Selling a Home Can Skip the Limits Entirely
Gain from selling a primary residence is often excluded from taxable income before any of these limits come into play. Single filers can exclude up to $250,000 of gain; married couples filing jointly can exclude up to $500,000.7Office of the Law Revision Counsel. 26 USC 121 – Exclusion of Gain From Sale of Principal Residence
To qualify, you must meet two tests during the five years ending on the sale date:8Internal Revenue Service. Sale of Residence – Real Estate Tax Tips
- Ownership: you owned the home for at least two years.
- Use: you lived in it as your main home for at least two years.
The two years don’t have to be consecutive, and the ownership and use periods can overlap. A married couple who bought for $300,000 and sold for $750,000 would owe zero federal capital gains tax on the $450,000 profit if both tests are met.9Internal Revenue Service. Topic No 701, Sale of Your Home Any gain above the exclusion amount then follows the standard long-term brackets based on total income.
State Taxes Are Separate
Federal income limits don’t cover what your state may charge. Most states tax capital gains as ordinary income, and state rates can add anywhere from roughly 1% to over 13% on top of the federal bill. A handful of states impose no income tax on investment gains at all. Whatever the federal calculation says, check your state’s rules before treating a number as final.