The long term capital gains tax rate 2026 stays at 0%, 15%, or 20%, the same three preferential rates as prior years, with each income threshold adjusted upward for inflation. Which rate you pay depends on your total taxable income and filing status, not on how large the gain is, so a carefully managed retirement year can put some gains in the 0% zone.
For 2026, long-term capital gains (assets held more than one year) are taxed at 0%, 15%, or 20% federally, unchanged from 2025. A single filer pays 0% on taxable income up to $49,450, 15% up to $545,500, and 20% above that. Married couples filing jointly pay 0% up to $98,900 and 15% up to $613,700. Short-term gains are taxed as ordinary income (10% to 37%).
What are the 2026 long-term capital gains tax rates?
The 2026 long-term capital gains tax rates are 0%, 15%, and 20%. These preferential federal rates apply to gains on capital assets (stocks, funds, real estate, and similar property) held longer than one year. The rates themselves did not change for 2026; only the taxable-income thresholds that separate them rose with inflation. Your rate is set by your total taxable income and filing status.
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The 0/15/20% structure is deliberately gentler than the ordinary income schedule, where the top federal rate reaches 37%. Your rate is driven by taxable income (income after the $16,100 single or $32,200 married filing jointly standard deduction for 2026). A retiree with modest withdrawals can sit inside the 0% band, while a high earner with the same gain pays 15% or 20% because their ordinary income already fills the lower bands.
2026 long-term capital gains brackets by filing status
For 2026, single filers pay 0% on long-term capital gains up to $49,450 of taxable income, 15% up to $545,500, and 20% above. Married filing jointly thresholds are $98,900 and $613,700. Head of household is $66,200 and $579,600. Married filing separately is $49,450 and $306,850. These are taxable-income breakpoints, not gain amounts.
Most guides show only single and joint filers. The full 2026 table below adds married filing separately and head of household, the statuses others routinely omit.
| Filing status | 0% rate: taxable income up to | 15% rate: taxable income up to | 20% rate: taxable income over |
|---|---|---|---|
| Single | $49,450 | $545,500 | $545,500 |
| Married filing jointly | $98,900 | $613,700 | $613,700 |
| Head of household | $66,200 | $579,600 | $579,600 |
| Married filing separately | $49,450 | $306,850 | $306,850 |
The thresholds rose modestly from 2025 with inflation indexing. For married couples filing jointly, the 0% ceiling moved from $96,700 in 2025 to $98,900 in 2026. Qualified dividends use these same 0/15/20% thresholds and stack together with gains; nonqualified (ordinary) dividends do not.
What is the difference between short-term and long-term capital gains in 2026?
The difference is the holding period. Short-term capital gains come from assets held one year or less and are taxed as ordinary income at 10% to 37% in 2026. Long-term capital gains come from assets held more than one year and are taxed at the preferential 0%, 15%, or 20% rates. The line is day 365 versus day 366: you must hold longer than one full year to earn long-term treatment.
The holding period starts the day after you acquire the asset and ends the day you sell. Holding exactly one year is not enough; the asset must be held more than one year (at least one year plus one day). The gap is large: an investor in the 37% ordinary bracket who sells a stock held 13 months pays 20% federally, while selling after 11 months costs 37%. Waiting past the one-year mark is one of the simplest ways to cut the tax on a sale.
| Feature | Short-term capital gain | Long-term capital gain |
|---|---|---|
| Holding period | One year or less (day 365 or sooner) | More than one year (day 366 or later) |
| 2026 federal rate | Ordinary income, 10% to 37% | 0%, 15%, or 20% |
| Taxed like | Wages and interest | Preferential capital rate |
How are long-term capital gains actually calculated?
Long-term capital gains stack on top of your ordinary taxable income to set the rate. You first fill the brackets with ordinary income (wages, IRA withdrawals, pensions), then the long-term gain sits on top and is taxed at whatever 0/15/20% band it reaches. A gain can span two bands: part taxed at 0% and the rest at 15%, for example.
The IRS treats long-term gains as the last dollars of income, so your ordinary income sets the starting point and the gain is measured up from there. Consider a 2026 married couple filing jointly with $70,000 of ordinary taxable income who realize a $40,000 long-term gain. The 0% band for joint filers runs to $98,900, so the first $28,900 of the gain is taxed at 0% and the remaining $11,100 at 15%. This is the foundation of how capital gains interact with ordinary income.
How much can you earn and still pay 0% capital gains in 2026?
In 2026 you can have taxable income up to $49,450 (single) or $98,900 (married filing jointly) and still pay 0% on long-term capital gains. Because taxable income is after the standard deduction, a married couple can have roughly $131,100 of total income ($98,900 plus the $32,200 standard deduction) and still keep long-term gains in the 0% band, if that income is the right mix.
The 0% rate is the centerpiece of gap-year planning. Between the end of work and the start of Social Security and required minimum distributions, many retirees have several years of unusually low ordinary income, a window to realize appreciated gains at zero federal tax. The catch is that the gain itself counts toward the $98,900 ceiling; realize too much and the excess spills into the 15% band. Careful sizing each year, coordinated with any required minimum distributions that raise ordinary income, keeps the harvest inside the 0% zone and is central to how we approach tax-efficient withdrawals in retirement.
Special capital gains rates: collectibles (28%) and real estate depreciation recapture (25%)
Two long-term gains do not use the 0/15/20% schedule. Collectibles (art, coins, precious metals, antiques) held more than one year are taxed at a maximum 28% rate. Unrecaptured Section 1250 gain, the portion of a real estate gain attributable to prior depreciation deductions, is taxed at a maximum 25% rate. Both are long-term rates, but higher than the standard preferential brackets.
These special rates matter to investors who own tangible assets or rental property. The 28% collectibles rate applies to physical collectible items and to gains on certain funds backed by physical metals; if your ordinary rate is below 28%, you pay that lower rate instead, since 28% is a ceiling.
Unrecaptured Section 1250 gain applies when you sell depreciated real estate. The depreciation you deducted over the years is recaptured at up to 25%, while the remaining appreciation above your original cost is taxed at the ordinary 0/15/20% long-term rates. Rental property owners often underestimate this recapture layer.
Net Investment Income Tax: the extra 3.8%
The Net Investment Income Tax (NIIT) adds a 3.8% surtax on investment income, including capital gains, for higher earners. It applies when modified adjusted gross income exceeds $200,000 (single) or $250,000 (married filing jointly) in 2026. The surtax hits the lesser of net investment income or the amount of MAGI above the threshold, pushing the top effective federal rate on long-term gains to 23.8%.
The NIIT thresholds are not indexed for inflation, so more taxpayers cross them each year. The tax applies to capital gains, dividends, interest, and rental income; wages and active business income are excluded, though they raise your MAGI. Stacking the 3.8% surtax on the 20% top rate produces a 23.8% effective federal rate for the highest earners, and state tax sits on top. Our guide to the Net Investment Income Tax for 2026 covers the MAGI mechanics in full.
Do you pay state tax on capital gains?
Most states tax capital gains as ordinary income, adding roughly 2% to 13% on top of the federal rate, and few states offer a preferential long-term rate. Nine states, including Texas, Florida, Nevada, Washington (on wage income), Tennessee, and Wyoming, levy no personal income tax and therefore no tax on capital gains. California taxes gains at ordinary rates up to 13.3%, among the highest in the country.
State treatment can outweigh the federal rate. A top earner in California faces a combined federal plus state plus NIIT burden well above 30% on long-term gains, while the same investor in Texas or Florida pays only the federal amount. Washington adds its own twist, taxing long-term gains above an annual exemption at 7% despite having no broad income tax. Confirm your state rules before assuming a gain is state-tax-free.
Did the OBBBA change capital gains rates for 2026?
No. The One Big Beautiful Bill Act (OBBBA, Public Law 119-21, signed July 4, 2025) did not change the 0/15/20% long-term capital gains rates. Those rates were never scheduled to expire. What OBBBA did was make the 2017 Tax Cuts and Jobs Act individual income tax brackets permanent, removing the year-end 2025 expiration that had created uncertainty. The capital gains structure carries forward unchanged.
A lot of older content still frames capital gains around a “TCJA expiration.” That framing is outdated: the ordinary income brackets set to revert after December 31, 2025, are now permanent, and the long-term capital gains rates were always separate and stable.
This permanence is a planning benefit. The window for Roth conversions, gains harvesting, and bracket management is no longer compressed by an approaching tax cliff, which makes multi-year Roth conversion break-even analysis more reliable.
Pairing 0% capital gains harvesting with Roth conversions
Low-income gap years let retirees combine two moves: harvest long-term gains at 0% and convert traditional IRA dollars to Roth at low ordinary rates. The tension is that both use up the same income room. A Roth conversion adds ordinary income, which can push gains out of the 0% band, so the two strategies must be sized together each year, not run independently.
This coordination is the core of retirement tax planning, and most capital gains guides never connect it. A Roth conversion is uncapped, fully taxable ordinary income, irreversible, and must be completed by December 31. Because it raises ordinary income, every conversion dollar fills the 0/15/20% stack from the bottom and can turn a 0% gain into a 15% gain.
In practice, some investors prioritize the 0% gain harvest in the lowest-income years and lean into conversions where a 15% gain rate is acceptable; the split depends on future RMDs, IRMAA thresholds, and legacy goals. Deciding how much to convert to Roth is where the two strategies meet, and mistiming a conversion near the 2026 conversion deadline can waste a low-income year.
Step-up in basis at death
The step-up in basis resets an inherited asset’s cost basis to its fair market value on the date of the original owner’s death. This erases the unrealized capital gain that built up during the owner’s lifetime, so heirs who sell immediately owe little or no capital gains tax. For appreciated taxable assets, holding until death can eliminate embedded gains entirely.
The step-up creates a genuine planning choice. If a parent bought stock for $50,000 now worth $300,000, an heir who inherits it takes a $300,000 basis and pays zero tax on selling at that price, whereas selling during the parent’s life would have triggered tax on the $250,000 gain.
For retirees, this often argues for spending from tax-deferred accounts first and preserving appreciated taxable assets for heirs. Sequencing withdrawals to capture the step-up, while managing current-year brackets, is a core part of a coordinated retirement income plan.
Frequently asked questions
What is the tax rate on capital gains?
Long-term capital gains (assets held more than one year) are taxed at 0%, 15%, or 20% federally in 2026, based on your taxable income and filing status. Short-term gains (held one year or less) are taxed as ordinary income at 10% to 37%. Higher earners may also owe the 3.8% Net Investment Income Tax, raising the top effective long-term rate to 23.8%.
How much can you make in 2026 and still pay 0% capital gains?
In 2026, single filers with taxable income up to $49,450 and married couples filing jointly up to $98,900 pay 0% on long-term capital gains. Head of household reaches $66,200. Because taxable income is measured after deductions, a joint filer taking the $32,200 standard deduction can have meaningfully more total income and still keep long-term gains in the 0% band.
How do I avoid capital gains on my taxes?
Common approaches include holding assets more than one year for preferential rates, realizing gains in low-income years within the 0% band, offsetting gains with tax-loss harvesting, holding investments in tax-advantaged accounts, and passing appreciated assets to heirs for a step-up in basis at death. These are educational examples, not advice; many investors coordinate them with a qualified professional.
How are long-term capital gains calculated?
Long-term gains stack on top of your ordinary taxable income. You fill the 0/15/20% brackets with ordinary income first, then the gain sits on top and is taxed at whichever band it reaches. A single gain can span two bands, with part taxed at 0% and the rest at 15%, depending on how much income sits below it.
Do I pay state tax on capital gains?
In most states, yes. The majority of states tax capital gains as ordinary income, adding roughly 2% to 13%. Nine states, including Texas, Florida, Nevada, Wyoming, and Tennessee, have no personal income tax and do not tax capital gains. California taxes gains at ordinary rates up to 13.3%. Confirm your specific state rules before a large sale.
What is the 0% capital gains tax rate threshold for 2026?
The 2026 0% long-term capital gains threshold is $49,450 of taxable income for single filers, $98,900 for married filing jointly, $66,200 for head of household, and $49,450 for married filing separately. Taxable income includes the gains themselves, so the realized gain counts toward the ceiling when you plan a 0% harvest.
Are capital gains taxed as ordinary income?
Short-term capital gains (assets held one year or less) are taxed as ordinary income at 10% to 37%. Long-term capital gains (held more than one year) are taxed at the preferential 0/15/20% rates instead. One exception: gains inside a traditional IRA lose long-term treatment and are taxed as ordinary income when withdrawn.
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Q3 Advisors is a registered investment adviser focused on retirement tax planning. This page is educational and is not advice; consult a qualified professional.
