How capital gains are taxed in 2026
When you sell a stock, an ETF, a mutual fund or crypto for more than you paid, the profit is a capital gain. The IRS taxes it differently depending on how long you held the asset. Long-term gains, on assets held for more than one year, benefit from preferential rates of 0%, 15% or 20%, and so do qualified dividends. Short-term gains, on assets held one year or less, are added to your ordinary income and taxed at your regular bracket, from 10% to 37%.
The preferential rate does not depend on the size of the gain alone but on your total taxable income, after the standard deduction ($16,100 for a single filer and $32,200 for a married couple filing jointly in 2026). Your ordinary income fills the bands first; your long-term gains are then stacked on top. The part of the gain that falls below the 0% threshold is tax-free, the part between the two thresholds is taxed at 15%, and anything above the upper threshold at 20%.
| Filing status | 0% | 15% | 20% |
|---|---|---|---|
| Single | Up to $49,450 | $49,451 to $545,500 | Over $545,500 |
| Married filing jointly | Up to $98,900 | $98,901 to $613,700 | Over $613,700 |
| Married filing separately | Up to $49,450 | $49,451 to $306,850 | Over $306,850 |
| Head of household | Up to $66,200 | $66,201 to $579,600 | Over $579,600 |
A worked example
Take a single filer earning $80,000 in wages who sells shares held for three years with a $20,000 gain. Total income is $100,000, and taxable income after the $16,100 standard deduction is $83,900. The wages use up the first $63,900 of taxable income, already above the $49,450 0% threshold, so the whole gain is taxed at 15%: $3,000.00 of federal tax, and $17,000.00 left after tax.
Had the same shares been held for less than a year, the $20,000 would have been a short-term gain taxed at the 22% ordinary rate: $4,400.00, or $1,400.00 more. Waiting until the one-year mark can be worth a lot.
A married couple filing jointly with $60,000 of wages and a $50,000 long-term gain pays $0.00 on that gain: their taxable income of $77,800 stays under the $98,900 0% threshold.
The 3.8% net investment income tax
Higher earners pay an additional 3.8% on investment income: interest, dividends, capital gains, rental and royalty income. It applies when modified adjusted gross income exceeds $200,000 for single filers and heads of household, $250,000 for married couples filing jointly, or $125,000 for married individuals filing separately, and it is charged on the lower of your net investment income and the excess over the threshold. For a single filer with $300,000 of wages and a $100,000 long-term gain, the NIIT adds $3,800.00 to the $15,000.00 of capital gains tax, for a combined rate of 18.8% on the gain.
Short-term gains and the 2026 tax brackets
Short-term gains, interest and non-qualified dividends have no special rate: they are taxed exactly like a salary. The calculator measures the extra tax they create by comparing your tax with and without your investment income.
| Rate | Single | Married filing jointly | Head of household |
|---|---|---|---|
| 10% | $0 to $12,400 | $0 to $24,800 | $0 to $17,700 |
| 12% | $12,401 to $50,400 | $24,801 to $100,800 | $17,701 to $67,450 |
| 22% | $50,401 to $105,700 | $100,801 to $211,400 | $67,451 to $105,700 |
| 24% | $105,701 to $201,775 | $211,401 to $403,550 | $105,701 to $201,750 |
| 32% | $201,776 to $256,225 | $403,551 to $512,450 | $201,751 to $256,200 |
| 35% | $256,226 to $640,600 | $512,451 to $768,700 | $256,201 to $640,600 |
| 37% | Over $640,600 | Over $768,700 | Over $640,600 |
Legal ways to reduce your capital gains tax
- Hold for more than a year. Crossing the one-year mark turns a gain taxed up to 37% into one taxed at 0%, 15% or 20%.
- Offset gains with losses. Realized losses reduce your gains first; up to $3,000 of net loss a year can then reduce ordinary income, and the rest carries forward. Enter your gains net of losses in the calculator.
- Use your 0% band. In a low-income year (career break, early retirement), realizing gains up to the 0% threshold can be tax-free.
- Use tax-advantaged accounts. Gains inside a 401(k), traditional or Roth IRA or HSA are not taxed when realized.
- Donate appreciated shares. Giving long-term shares to charity avoids the gain and can provide a deduction if you itemize.
What the calculator does not include
It covers federal income tax and the NIIT for one tax year. It does not include state and local taxes, the alternative minimum tax, the 25% rate on unrecaptured section 1250 gain or the 28% rate on collectibles, the additional deduction for taxpayers 65 and older, credits and their phase-outs, or the treatment of net capital losses. The standard deduction can be replaced by your own figure if you itemize or qualify for extra amounts.
To see how reinvested gains could grow over time, try the compound interest calculator.
Frequently asked questions
What is the capital gains tax rate for 2026?
Long-term gains (assets held more than one year) and qualified dividends are taxed at 0%, 15% or 20% depending on your taxable income. For a single filer in 2026, the 0% rate applies up to $49,450 of taxable income and the 15% rate up to $545,500; above that, 20% applies. Married couples filing jointly get 0% up to $98,900 and 15% up to $613,700. Short-term gains are taxed as ordinary income, at 10% to 37%.
Do capital gains push me into a higher tax bracket?
Long-term gains never raise the tax rate on your wages: they are stacked on top of your ordinary income and taxed at their own 0/15/20% rates. However, they do increase your taxable income, which can move part of the gain itself from the 0% band to 15%, or from 15% to 20%, and can trigger the 3.8% net investment income tax or phase-outs of some credits.
How do I pay 0% tax on capital gains?
If your taxable income, including the gain, stays below $49,450 (single) or $98,900 (married filing jointly) in 2026, your long-term gains and qualified dividends are taxed at 0%. Taxable income is measured after the standard deduction ($16,100 single, $32,200 joint), so a married couple can have total income above $130,000 and still pay 0% on part of their gains. Some investors deliberately realize gains in low-income years for this reason.
What is the net investment income tax (NIIT)?
It is an extra 3.8% federal tax on investment income (interest, dividends, capital gains, rents) when your modified adjusted gross income exceeds $200,000 (single or head of household), $250,000 (married filing jointly) or $125,000 (married filing separately). It applies to the lower of your net investment income and the amount by which your income exceeds the threshold. These thresholds are not adjusted for inflation.
Does this calculator include state taxes?
No. It computes federal income tax and the net investment income tax only. Most states tax capital gains as ordinary income, at rates from 0% (for example Florida, Texas, Washington for most gains, Nevada) to more than 13% in California, so add your state tax separately.
What counts as a qualified dividend?
Most dividends paid by US companies and many foreign companies are qualified if you held the shares for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. Your broker reports them in box 1b of Form 1099-DIV. Non-qualified (ordinary) dividends, such as most REIT distributions, are taxed like interest at your ordinary rate.
Sources
- IRS, Rev. Proc. 2025-32 (2026 inflation adjustments), sections 4.01 and 4.03
- IRS, Tax inflation adjustments for tax year 2026
- IRS, Topic no. 559, Net investment income tax
Rates and thresholds checked on October 11, 2026.
Educational tool: not financial, tax or investment advice. Results are estimates based on the assumptions you enter and on official rates at the date shown. Investments can fall as well as rise. For decisions about your own situation, speak to a qualified adviser or tax professional. Read the full disclaimer.