When you sell an investment for more than you paid, the profit may be taxed. But how much you owe can depend heavily on how long you held it and how much you earn. For 2026, the IRS adjusted the long-term capital gains thresholds upward. Here is a clear breakdown of the brackets and how they work.
This article is for educational purposes only and is not tax advice. Tax situations vary, so consult a qualified tax professional about your specific case.
What Are Capital Gains?
A capital gain is the profit you make when you sell an asset, such as a stock, fund, or property, for more than you paid for it. The amount you paid is your cost basis, and the gain is the difference.
Gains are generally only taxed when you sell. If your investment rises in value but you keep holding it, that paper gain is usually not taxed yet. This is sometimes called an unrealized gain.
The tax rate you pay depends mainly on how long you owned the asset before selling. If you are still deciding how to invest in the first place, that holding period is one of the first things worth understanding.
Short-Term vs Long-Term Capital Gains
This distinction matters a lot for your tax bill.
- Short-term gains apply to assets held for one year or less. They are taxed as ordinary income, using the same rates as your wages. Those rates can be higher.
- Long-term gains apply to assets held for more than one year. They get the special lower rates of 0%, 15%, or 20%.
Because the long-term rates are often lower, holding an asset for more than a year before selling can change how much tax applies. This is general information, not a recommendation to buy or sell anything. The type of asset matters too, and our look at etf or mutual fund choices explains how each is structured.
2026 Long-Term Capital Gains Tax Brackets
For tax year 2026, long-term capital gains and qualified dividends are taxed at 0%, 15%, or 20%, based on your taxable income and filing status. The IRS raised these thresholds by roughly 2.7% from 2025.
The table below shows the 2026 thresholds.
| Rate | Single | Married Filing Jointly | Head of Household |
|---|---|---|---|
| 0% | Up to $49,450 | Up to $98,900 | Up to $66,200 |
| 15% | $49,451 to $545,500 | $98,901 to $613,700 | $66,201 to $579,600 |
| 20% | Over $545,500 | Over $613,700 | Over $579,600 |
These figures are for tax year 2026 and are based on IRS Revenue Procedure 2025-32. Married filing separately uses different cutoffs, so check those separately if they apply to you.
How the Brackets Actually Work
A common myth is that crossing into the 15% bracket taxes all your gains at 15%. That is not how it works.
The rates are tiered. Only the portion of your gains that falls into each band is taxed at that band's rate. So a single filer might pay 0% on the part that fits under the 0% threshold and 15% on the part above it.
Your total taxable income, including wages, helps decide which band your gains land in. Long-term gains stack on top of your other income for this purpose. Long-held buy-and-hold positions, such as the best index funds, tend to favor the lower long-term rates.
Because holding period drives the rate, where you buy and track investments matters. Robinhood is a commission-free brokerage that shows your purchase dates and holding periods, which helps you see whether a sale would fall under short-term or long-term rates before you trade.
Robinhood
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Robinhood is a trading platform that brings stocks, ETFs, options, futures, prediction markets, crypto, and retirement accounts together in one app.
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The Net Investment Income Tax (NIIT)
Higher earners may owe an extra tax on investment income called the net investment income tax, or NIIT. It is an additional 3.8% on certain investment income.
The NIIT kicks in when your modified adjusted gross income (MAGI) crosses these thresholds:
- $200,000 for single or head of household filers
- $250,000 for married filing jointly
- $125,000 for married filing separately
The 3.8% applies to the smaller of your net investment income or the amount your MAGI exceeds the threshold. It is added on top of regular capital gains tax, not instead of it.
Ways People Manage Capital Gains Taxes
There are common, legal strategies people discuss with tax professionals. These are general concepts, not advice for your situation.
- Holding longer than a year can shift a gain from short-term to long-term rates.
- Tax-loss harvesting uses investment losses to offset gains.
- Using tax-advantaged accounts like IRAs or 401(k)s can change how and when investment growth is taxed.
- Timing sales across tax years may affect which bracket gains fall into.
Which, if any, of these makes sense depends on your full financial picture, and harvesting losses comes with traps of its own, since the wash sale rule disallows a loss if you rebuy the same security within 30 days. A tax professional can help you weigh them. Some investors also gravitate toward the best ETFs partly because they can be tax-efficient to hold.
Public is another commission-free brokerage for stocks, ETFs, and bonds, and it provides year-end tax documents that summarize realized gains and losses, which can make tracking these strategies across a tax year easier.
Public
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Tools and Where to Track Things
Keeping good records of what you paid and when you bought makes tax time easier. Many brokerages provide tax documents that summarize your gains and losses for the year, which can simplify filing. A good investment app for beginners usually handles this record-keeping for you.
Crypto sales are also taxable events that can create capital gains. Gemini is a regulated cryptocurrency exchange that issues transaction history and tax reporting, which matters because gains from selling digital assets follow the same short-term and long-term rules covered above. None of this is tax advice, so review your forms with a professional.
Gemini
Gemini
Buy, sell, and trade 70+ cryptocurrencies on one of America's most trusted and regulated exchanges. Founded by the Winklevoss twins, Gemini makes crypto simple and secure — plus get $15 in free Bitcoin when you trade $100.
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Higher fees than some competitors on the basic platform.
Frequently Asked Questions
What are the capital gains tax rates for 2026?
Long-term capital gains for 2026 are taxed at 0%, 15%, or 20%, depending on your taxable income and filing status. Short-term gains, from assets held a year or less, are taxed at ordinary income rates instead.
At what income do I pay 0% on capital gains in 2026?
For 2026, single filers may qualify for the 0% rate with taxable income up to $49,450, and married couples filing jointly up to $98,900. Head of household filers qualify up to $66,200. Income above those levels moves into the 15% band.
What is the net investment income tax?
The NIIT is an extra 3.8% tax on certain investment income for higher earners. It applies when your modified adjusted gross income passes $200,000 (single) or $250,000 (married filing jointly). It is charged on the lesser of your investment income or the amount over the threshold.
Do I owe capital gains tax if I do not sell?
Usually no. Capital gains are generally taxed only when you sell and lock in the profit. An investment that rises in value but stays in your account typically creates an unrealized gain, which is not taxed until you sell.
This article is for educational purposes only and is not tax advice. Figures are for tax year 2026 based on IRS guidance and may be updated. Consult a licensed tax professional about your situation.
