What is the long-term capital gains tax rate for 2026?

For 2026, long-term capital gains are taxed at 0% (single filers with taxable income up to $48,350), 15% (up to $533,400), or 20% (above $533,400). An additional 3.8% Net Investment Income Tax applies for high earners above $200,000 (single) or $250,000 (married).

How long do I need to hold an asset to get the lower capital gains rate?

You must hold the asset for more than one year (at least 366 days) to qualify for the long-term capital gains rate. Selling on or before the one-year anniversary triggers short-term rates taxed as ordinary income, which can be significantly higher.

What is tax-loss harvesting?

Tax-loss harvesting is selling investments that have declined in value to realize a capital loss, which offsets capital gains and reduces your tax bill. Losses offset gains dollar-for-dollar. Net losses up to $3,000 can also offset ordinary income per year. Remaining losses carry forward to future years.

Is cryptocurrency subject to capital gains tax?

Yes. The IRS treats cryptocurrency as property, not currency. Every sale, trade, or use of crypto to purchase goods or services is a taxable event. Short-term gains (held ≤1 year) are taxed as ordinary income; long-term gains (held >1 year) qualify for preferential rates. Keep detailed records of all crypto transactions including dates and cost basis.

Capital Gains Tax Explained: Short-Term vs. Long-Term Rates

Short-Term vs. Long-Term: The Key Distinction

The IRS draws a sharp line at one year of holding time. Sell an asset you've held for one year or less and the gain is "short-term" — taxed as ordinary income at your same marginal rate (10%–37%). Hold it for more than one year before selling and the gain is "long-term," taxed at preferential rates: 0%, 15%, or 20%.

This single decision — holding or selling before the one-year mark — can mean a difference of 10–17 percentage points in tax rate on the same gain. For a $50,000 gain, that's $5,000–$8,500 in additional taxes by selling one day too early.

2026 Long-Term Capital Gains Rates

0% rate: Single filers with taxable income up to $48,350; married filing jointly up to $96,700. 15% rate: Single up to $533,400; married up to $600,050. 20% rate: Above $533,400 (single) or $600,050 (married). These thresholds apply to your total taxable income, not just the gain itself. Your regular income "fills up" the brackets first, then your gains are stacked on top.

The Net Investment Income Tax (NIIT)

High earners face an additional 3.8% Net Investment Income Tax on investment income including capital gains, dividends, and rental income. The NIIT threshold is $200,000 for single filers and $250,000 for married filing jointly. This means the effective top capital gains rate for very high earners is 23.8% (20% + 3.8%). The NIIT threshold is not indexed for inflation, so it applies to more taxpayers each year.

Important: Your long-term gain may partially fall in the 0% bracket if your other taxable income is low enough. For example, a retiree with $40,000 in Social Security and pension income and $20,000 in long-term capital gains might owe 0% on the gains — a tax-free wealth transfer that's often overlooked.

What Triggers Capital Gains?

Capital gains tax applies when you sell or exchange a capital asset at a profit. This includes: stocks, bonds, ETFs, mutual funds (distributions count as a sale), real estate, cryptocurrency (the IRS treats crypto as property — every trade, sale, or spend is a taxable event), collectibles, art, and business interests. Unrealized gains (an asset that's increased in value but hasn't been sold) are not taxed until the sale.

Tax-Loss Harvesting

Capital losses can be used to offset capital gains dollar-for-dollar. If you realize $20,000 in gains and harvest $15,000 in losses by selling losing positions, you only owe tax on $5,000. Losses in excess of gains can further offset up to $3,000 of ordinary income per year. Any remaining excess loss carries forward to future tax years indefinitely. Tax-loss harvesting is most valuable in taxable accounts — it has no effect in tax-advantaged accounts like IRAs.

Real Estate and the Section 121 Exclusion

The IRS provides a significant exclusion for the sale of a primary residence: $250,000 of gain is excluded from tax for single filers, and $500,000 for married filing jointly, provided you've lived in the home as your primary residence for at least 2 of the last 5 years. This means most homeowners selling a primary residence pay no capital gains tax. Rental properties don't qualify for this exclusion and are subject to depreciation recapture as well.

This guide is for informational purposes only and does not constitute tax, legal, or financial advice. Tax laws change frequently. Consult a qualified tax professional for advice specific to your situation.