Capital Gains Tax Brackets for 2026

Two add-ons sit outside the table. The net investment income tax (NIIT) layers 3.8% on investment income once modified AGI exceeds $200,000 (single) or $250,000 (joint) — thresholds that are not inflation-adjusted, so they quietly capture more households every year. And two special asset classes keep their own rates: collectibles max out at 28%, and unrecaptured Section 1250 gain (the depreciation you claimed on real estate) is taxed at up to 25% — more on that in the real estate section below.

These breakpoints are indexed annually; the figures above are the 2026 amounts. Note they're based on taxable income — after your standard or itemized deduction — not gross income, which works in your favor.

The single most misunderstood mechanic in the capital gains system: your gain doesn't get its own bracket ladder — it stacks on top of your ordinary income. Ordinary taxable income fills the brackets from the bottom; the long-term gain sits on top and is taxed at whatever capital-gains rate applies at that altitude. A gain can even straddle two rates.

Worked example. A married couple has $80,000 of taxable ordinary income and sells stock for a $30,000 long-term gain. The 0% bracket for joint filers runs to $98,900. The first $18,900 of their gain fills the space between $80,000 and $98,900 — taxed at 0%. The remaining $11,100 is taxed at 15%, costing $1,665. Total tax on a $30,000 gain: $1,665 — a 5.6% effective rate. Their neighbor with $400,000 of income pays 15% (plus 3.8% NIIT) on every dollar of the same gain: $5,640.

Hold an asset more than one year and the gain is long-term (0/15/20%). One year or less, and it's short-term — ordinary income, up to 37% federally plus NIIT. For a top-bracket seller with a $100,000 gain, selling at day 364 versus day 366 is roughly a $17,000 decision. The clock starts the day after acquisition and includes the sale date; inherited assets are automatically long-term, and gifted assets carry the donor's holding period.

Short-term and long-term positions also net against each other in a specific order (short losses first offset short gains, long against long, then across). If you're carrying losses, the netting order is plannable — see the harvesting section below.

Real estate plays by the same brackets with three big twists:

• Primary residence exclusion (§121): live in the home two of the last five years and exclude $250,000 of gain ($500,000 joint). Thinking of renting your old house instead of selling? The exclusion has a shelf life — we walk through that decision in Should You Sell or Rent Your House?
• Depreciation recapture: every dollar of depreciation you claimed (or could have claimed) on a rental comes back at sale as unrecaptured §1250 gain, taxed up to 25% — separate from, and on top of, the regular gain brackets. Aggressive depreciation via cost segregation is still usually worth it, but the exit math belongs in the model from day one.
• The 1031 exchange: defer the entire gain — including recapture — by exchanging into replacement investment property under the 1031 exchange rules. Strict 45- and 180-day clocks apply.

Full guide for founders and owners: Capital Gains Tax on a Business Sale.

• Wait out the year. The cheapest strategy in the code: convert 37% into 15–20% by holding past twelve months.
• Harvest gains in the 0% bracket. Low-income years — early retirement, sabbaticals, a business loss year — let you sell and immediately repurchase appreciated assets, resetting basis tax-free. There's no wash-sale rule on gains.
• Harvest losses against gains. Realized losses offset gains dollar-for-dollar, plus $3,000 of ordinary income, with indefinite carryforward. Watch the wash-sale rule: repurchase a substantially identical security within 30 days and the loss is disallowed.
• Donate appreciated shares, not cash. Give long-term appreciated stock to charity (directly or via a donor-advised fund) and you deduct full market value while nobody ever pays the gain.
• Spread the gain with an installment sale. Seller-financed deals recognize gain as payments arrive — often keeping each year's slice in the 15% bracket instead of piling into 20% + NIIT at once.
• Time around the NIIT cliff. If MAGI hovers near $200K/$250K, shifting income or deductions between years can keep 3.8% off the entire gain.
• Hold until death (yes, really). Under current law heirs receive a stepped-up basis, erasing the unrealized gain entirely. Grim, but it changes which asset you should spend first in retirement.

A large gain touches everything: the brackets, NIIT, state tax (California taxes gains as ordinary income at up to 13.3% — there is no federal-style discount), Medicare premiums two years later, and your estimated tax payments for the year of sale — a Q4 sale usually means a January 15 payment, or the annualized-method paperwork.

The right sequence is model first, sell second. Start with the capital gains tax calculator for the federal picture, then pressure-test the full plan — state, NIIT, timing, and the reinvestment side — with a CPA before the transaction closes. After closing, your options shrink to approximately zero.