Short-term or long-term
The first question is how long you held the asset. IRS Topic 409 says a gain on an asset held one year or less is short-term. Anything held longer is long-term. The holding period starts the day after you buy and includes the day you sell, so a stock bought on March 10, 2025 has to be sold on March 11, 2026 or later for a long-term gain.
- Short-term gains are taxed as ordinary income, at the same 10 to 37 percent rates as wages.
- Long-term gains get their own rates of 0, 15 and 20 percent, with a few exceptions covered below.
The gain itself is the sale price minus your basis. Which shares count as sold, and so what the basis is, depends on the method you use; the guide to cost basis methods walks through them.
The 2026 long-term rates by filing status
Rev. Proc. 2025-32 sets the 2026 limits. The rate depends on taxable income, which is income after the standard or itemized deduction, including the gain.
| Filing status | 0% up to | 15% up to | 20% above |
|---|---|---|---|
| Single | $49,450 | $545,500 | $545,500 |
| Married filing jointly | $98,900 | $613,700 | $613,700 |
| Married filing separately | $49,450 | $306,850 | $306,850 |
| Head of household | $66,200 | $579,600 | $579,600 |
Surviving spouses use the joint figures. A married couple filing separately gets half the joint 0 percent limit, $49,450, and a 15 percent limit of $306,850, well below the single limit of $545,500.
How the gain stacks on your income
The long-term gain is not taxed on its own. Ordinary income such as wages fills the bands first, and the gain is placed on top of it. Whatever part of the gain still fits under the 0 percent limit is tax free, the next part is taxed at 15 percent, and only the part above the 15 percent limit pays 20 percent.
That is why the same gain can cost very different amounts for two people. It is also why the capital gains tax calculator asks for your other income, not only the gain.
Worked examples: a $20,000 gain in 2026
Three single filers each sell shares for a $20,000 gain. Each takes the 2026 standard deduction of $16,100 and has no other income. The last column shows what the same gain would cost if the shares had been held a year or less, using the 2026 ordinary rates.
| Wages | Ordinary taxable | At 0% | At 15% | Long-term tax | Short-term tax |
|---|---|---|---|---|---|
| $70,000 | $53,900 | $0 | $20,000 | $3,000.00 | $4,400.00 |
| $51,100 | $35,000 | $14,450 | $5,550 | $832.50 | $2,860.00 |
| $30,000 | $13,900 | $20,000 | $0 | $0.00 | $2,400.00 |
With $70,000 of wages, ordinary taxable income is already $53,900, above the $49,450 limit, so the whole gain is taxed at 15 percent: $3,000.00. Held a year or less, the same gain falls in the 22 percent bracket and costs $4,400.00, or $1,400.00 more.
With $51,100 of wages, ordinary taxable income is $35,000. The first $14,450 of the gain fits under the 0 percent limit and only $5,550 is taxed at 15 percent, for $832.50. With $30,000 of wages the whole gain fits under the limit and the federal tax on it is $0.00, against $2,400.00 if it were short-term. This is the gap people mean when they talk about harvesting gains in a low-income year. The income tax calculator shows the ordinary tax on the rest of the income, and the percentage calculator turns the total into an effective rate on the gain.
The 28 and 25 percent rates
Two kinds of long-term gain have higher maximum rates, according to IRS Topic 409.
| Gain | Maximum rate |
|---|---|
| Collectibles, such as coins or art | 28% |
| Unrecaptured section 1250 gain on real property | 25% |
| Other long-term gains | 20% |
| Short-term gains | Ordinary rates, up to 37% |
Topic 409 describes both as maximum rates. They apply only to those specific portions of a gain; the rest of a long-term gain in the same year still uses the 0, 15 and 20 percent bands. A main home is a separate case, because a large part of the gain can be excluded; see the guide to the home sale tax exclusion.
The 3.8 percent net investment income tax
On top of the capital gains rate, the net investment income tax (NIIT) adds 3.8 percent for people with income above a threshold. It applies to the smaller of your net investment income and the amount by which your modified adjusted gross income exceeds the threshold.
| Filing status | NIIT threshold |
|---|---|
| Single | $200,000 |
| Married filing jointly | $250,000 |
| Married filing separately | $125,000 |
| Head of household | $200,000 |
The IRS calls these statutory threshold amounts. Net investment income includes interest, dividends, capital gains, rental and royalty income. Wages and most self-employment income do not count, and neither does a home sale gain that is excluded from income.
Example: a single filer with modified AGI of $260,000, of which $80,000 is investment income. The excess over $200,000 is $60,000, which is smaller than the investment income, so the NIIT is 3.8 percent of $60,000: $2,280.00. That comes on top of the 15 percent on the gain.
Losses and timing
If your capital losses are larger than your capital gains, you can deduct up to $3,000 of the net loss against other income, or $1,500 if married filing separately, and carry the rest forward. The guide to the capital loss deduction works through the order. If you sell at a loss and buy the same security back within the window, the loss can be disallowed; see the wash sale rule.
- Check the purchase date before selling. One extra day can move a gain from ordinary rates to 15 percent.
- Add up your expected taxable income for the year and compare it with the 0 percent limit for your status.
- Check whether modified AGI will cross the NIIT threshold.
- Match gains with losses you already have in the same year.
Frequently asked questions
What are the capital gains tax rates for 2026?
Long-term gains on assets held more than a year are taxed at 0, 15 or 20 percent depending on taxable income. For a single filer in 2026 the 0 percent rate applies up to $49,450 of taxable income and the 15 percent rate up to $545,500. Short-term gains are taxed at ordinary income rates.
How long do I have to hold an asset for a long-term gain?
More than one year. IRS Topic 409 says a gain or loss on an asset held one year or less is short-term. The holding period starts the day after you acquire the asset and includes the day you sell it.
Does the gain itself count toward the 0 percent threshold?
Yes. The thresholds are amounts of taxable income, and the gain is part of taxable income. Ordinary income fills the bands first and the long-term gain sits on top, so a large gain can be taxed partly at 0 percent and partly at 15 percent.
When does the 3.8 percent net investment income tax apply?
When modified adjusted gross income is above $200,000 for single and head of household filers, $250,000 for joint filers and $125,000 for married filing separately. The tax is 3.8 percent of the smaller of your net investment income and the amount over the threshold. The IRS calls these statutory threshold amounts.
Are collectibles taxed at the same rates?
No. Net capital gain from collectibles such as coins or art is taxed at a maximum 28 percent rate. Unrecaptured section 1250 gain from selling real property you depreciated is taxed at a maximum 25 percent rate.
Sources
- IRS Rev. Proc. 2025-32 (2026 maximum zero rate and 15% rate amounts for every filing status; 2026 tax rate table for single filers; 2026 standard deduction of $16,100 for single filers)
- IRS Topic no. 409, Capital gains and losses (short-term if held one year or less; holding period rules; 28% collectibles rate; 25% unrecaptured section 1250 gain; $3,000 loss limit and carryover)
- IRS: Net investment income tax (3.8% rate; thresholds of $200,000, $250,000 and $125,000; what counts as net investment income; excluded home sale gain does not count)
General information based on the sources above, not tax, legal or financial advice.