Capital Gains Tax Rates 2026 — Short-Term vs Long-Term Brackets

Selling an investment at a profit? The tax you owe depends on two things: how long you held the asset and how much total income you have. The difference between short-term and long-term rates can mean paying 0% or 37% on the same gain.

Calculate your exact capital gains tax with the Capital Gains Tax Calculator→

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Short-Term Capital Gains Rates (Held 1 Year or Less)

Short-term gains are taxed as ordinary income — the same rates that apply to your salary or wages. For 2026:

Short-term gains stack on top of your regular income. If you earn $80,000 in salary and realize a $20,000 short-term gain, that gain is taxed in the 22–24% bracket range — not starting from the bottom.

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Long-Term Capital Gains Rates (Held Over 1 Year)

Long-term gains get preferential rates — significantly lower than ordinary income rates:

The 0% rate is real — and it's not just for low earners. A married couple with $96,700 or less in taxable income (after deductions) pays zero federal tax on long-term capital gains.

This is why holding period matters so much. A $50,000 gain taxed at 15% costs $7,500. The same gain held one day short of a year could cost $12,000 or more at ordinary rates.

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The Net Investment Income Tax (NIIT) — The Hidden 3.8%

High earners face an additional 3.8% surtax on investment income, including capital gains. It kicks in when your Modified Adjusted Gross Income (MAGI) exceeds:

The NIIT applies to the lesser of your net investment income or the amount your MAGI exceeds the threshold.

Example: You're single with $180,000 in wages and $50,000 in long-term capital gains. MAGI = $230,000, which exceeds the $200,000 threshold by $30,000. NIIT applies to $30,000 (the lesser of $50,000 in investment income or $30,000 over the threshold). Additional tax: $30,000 × 3.8% = $1,140.

This means top earners effectively pay 23.8% on long-term gains (20% + 3.8%) rather than the headline 20%.

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How the Holding Period Works

The IRS counts the day after you acquire an asset as day one. You must hold the asset for more than one year to qualify for long-term rates.

One extra day can save thousands. If you're close to the one-year mark, waiting is almost always worth it — unless you expect a significant price decline.

Use the Capital Gains Tax Calculator to see exactly how much you'd save by waiting.

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State Capital Gains Taxes

Federal rates are only part of the picture. Most states tax capital gains as ordinary income:

*NH and TN tax only interest/dividends, not capital gains. **WA has a 7% tax on capital gains over $250,000.

A California resident in the top bracket pays 33.3% + 3.8% NIIT = 37.1% on long-term gains — approaching short-term rates in many other states.

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Capital Gains on Specific Assets

Different asset types follow the same rate structure but have special rules:

Stocks and ETFs

Standard short-term/long-term rules apply. Watch out for the wash sale rule if you sell at a loss and repurchase within 30 days.

Real Estate

Primary residence gains up to $250,000 (single) or $500,000 (married) are excluded if you lived there 2 of the last 5 years. Gains above the exclusion are taxed at capital gains rates. See the full home sale exclusion rules.

Collectibles

Art, coins, precious metals, and other collectibles face a maximum 28% rate on long-term gains — higher than the standard 20% cap.

Cryptocurrency

The IRS treats crypto as property. Every sale, trade, or spend is a taxable event. Long-term/short-term rules apply based on your holding period. See our crypto tax guide.

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How to Minimize Capital Gains Tax

Several legal strategies can reduce your capital gains tax bill:

1. Hold for over one year — The single most impactful move. Drops your max rate from 37% to 20%.
2. Harvest losses — Sell losing positions to offset gains. Net losses up to $3,000/year can offset ordinary income. See tax-loss harvesting strategies.
3. Use the 0% bracket — In low-income years (early career, gap year, early retirement), realize gains while in the 0% bracket.
4. Donate appreciated assets — Donating stock held over a year to charity lets you deduct the full market value without paying gains tax.
5. Invest through tax-advantaged accounts — 401(k), IRA, and Roth accounts shield gains from annual taxation.

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Bottom Line

Short-term gains (held one year or less) are taxed at your ordinary income rate — up to 37%. Long-term gains (held over one year) are taxed at 0%, 15%, or 20% depending on your income, plus a potential 3.8% NIIT surcharge above $200,000/$250,000. The holding period is the single biggest factor in your capital gains tax bill. Before selling any investment, run the numbers with the Capital Gains Tax Calculator to see both the short-term and long-term tax impact. One extra day of holding can save you thousands.