Hold an asset more than a year and the gain usually gets a break: federal long-term capital gains rates of 0%, 15%, or 20%, instead of ordinary income rates that run as high as 37%. The rate you actually pay depends on your total taxable income for the year, and the breakpoints move every year with inflation. What trips people up is that the gain does not sit in a bracket of its own — it stacks on top of everything else you earned, and two special rates (28% and 25%) quietly override the table for certain assets. (Kiplinger)
2026 long-term capital gains brackets
| Rate | Single | Married filing jointly |
|---|---|---|
| 0% | up to $49,450 | up to $98,900 |
| 15% | $49,451 to $545,500 | $98,901 to $613,700 |
| 20% | over $545,500 | over $613,700 |
(Married filing separately and head of household use their own thresholds, published in the same IRS release. The 0% and 15% lines are where most middle-income filers actually land.) (Kiplinger)
The 3.8% NIIT stacks on top
The Net Investment Income Tax adds 3.8% to net investment income once modified AGI passes $200,000 (single) or $250,000 (joint). The NIIT thresholds are not inflation-indexed, so they sweep in more households every year as incomes creep up. For a high earner already in the 20% bracket, the effective top federal rate on long-term gains becomes 23.8% — and that is before any state tax. (Kiplinger)
Two rates the table does not show
- Collectibles — art, coins, precious-metals bullion, and most tangible collectibles — top out at 28%, regardless of your income.
- Unrecaptured Section 1250 gain — the depreciation you took (or should have taken) on real estate — is capped at 25%. This is why a rental-property sale can show one rate on the building and another on the land.
The brackets are marginal, and your gain stacks
This is the part people miss. Long-term gains do not get their own ladder. They sit on top of your ordinary income for bracket purposes. A single filer with $40,000 of ordinary taxable income who realizes a $30,000 long-term gain has $70,000 of taxable income for the year: the first $49,450 is in the 0% zone, and the remaining $20,550 is taxed at 15%. Timing a sale to stay under the 0% line (or to avoid crossing into 20%) is a legitimate planning move when the income is otherwise flexible. (Kiplinger)
Numbers: a joint-filer selling stock
A married couple filing jointly with $90,000 of other taxable income who sell stock for a $40,000 long-term gain: (Kiplinger)
- Total taxable income: $130,000
- That sits above the $98,900 0% line but well under the $613,700 15% ceiling, so the whole gain is taxed at 15%
- Federal LTCG tax: 15% of $40,000 = $6,000, and no NIIT applies because MAGI is under $250,000
Contrast that with a single filer already at $550,000 of income: the same $40,000 gain is taxed at 20% plus 3.8% NIIT — $9,520 instead of $6,000 — purely because of where the gain lands on the stack. (Kiplinger)
One more line that matters: short-term gains (assets held one year or less) are taxed as ordinary income, with no special rate and no NIIT exemption on the gain itself. The "one-year-plus-one-day" hold is the line between these two regimes, and it is worth tracking precisely for a position you are about to sell. (Kiplinger)
If you are weighing a sale this year, the capital gains calculator will show you the 0/15/20 band plus the NIIT overlay for your exact filing status and income. (Kiplinger)
The net investment income tax
High earners face an extra 3.8% tax on long-term capital gains and qualified dividends above the MAGI threshold, which in recent years has been around $250,000 for joint filers, $125,000 for others. This means the effective top rate on gains can be 23.8%, well above the bracket the ordinary income sits in. For a household that lives off a large investment portfolio, the capital gains rate plus the net investment tax is the real cost, and it is the number to plan around rather than the ordinary bracket. (Kiplinger)
Planning around the rate tiers
Because the 0%, 15%, and 20% tiers are based on ordinary taxable income, two investors with the same gain can owe very different amounts if one has more ordinary income. A retiree with mostly investment income may sit in the 0% or 15% tier even with a substantial gain, while a working professional with wages plus a large realized gain can push the gain into the 20% tier. The lever is ordinary income: lowering it through a retirement deferral or a timing decision can drop the gain into a cheaper tier. (Internal Revenue Service)
Harvesting in a low-income year
One of the most effective moves is to concentrate gains in years when ordinary income is temporarily low. After a large loss year, a sabbatical, or a planned deferral of a bonus, the same capital gain can land in a lower tier than in a normal earning year. The decision is a timing one, not a magnitude one, and it is easy to make only once you see the full picture of the coming year's ordinary income. (Kiplinger)
Disclaimer: This article is general educational information, not tax, legal, or investment advice. Dollar amounts come from the 2026 sources listed at the end of this article and may change. Before you act, talk to a licensed CPA, EA, or tax attorney about your own situation.