Capital Gains Tax Guide 2026
When you sell an investment — stocks, mutual funds, real estate, cryptocurrency, or other assets — for more than you paid, the profit is a capital gain. The IRS taxes this gain, but the rate depends on how long you held the asset and your income level.
Short-Term vs. Long-Term Capital Gains
This is the single most important distinction in capital gains taxation:
- Short-term: Assets held 1 year or less. Taxed as ordinary income at your regular bracket (10%–37%). If you sell a stock after 6 months, the profit is taxed just like a paycheck.
- Long-term: Assets held more than 1 year. Taxed at preferential rates of 0%, 15%, or 20%. Holding an investment one additional day past the one-year mark can dramatically lower your tax bill.
2026 Long-Term Capital Gains Tax Rates
| Filing Status | 0% Rate | 15% Rate | 20% Rate |
|---|---|---|---|
| Single | Up to $47,025 | $47,026 – $518,900 | Over $518,900 |
| Married Filing Jointly | Up to $94,050 | $94,051 – $583,750 | Over $583,750 |
| Married Filing Separately | Up to $47,025 | $47,026 – $291,850 | Over $291,850 |
| Head of Household | Up to $63,000 | $63,001 – $551,350 | Over $551,350 |
Note: Long-term capital gains income is "stacked on top" of ordinary income to determine which rate applies. Your capital gains rate is based on your total taxable income including the gains.
The 3.8% Net Investment Income Tax (NIIT)
High earners may also owe the Net Investment Income Tax: an additional 3.8% on capital gains (and other investment income like dividends and rental income) for taxpayers whose modified AGI exceeds $200,000 (single) or $250,000 (married). This effectively raises the top rate on capital gains to 23.8%.
Special Rules for Real Estate
If you sell your primary home at a gain, you may qualify for the home sale exclusion:
- Exclude up to $250,000 in gains (single) or $500,000 (married)
- You must have owned the home for at least 2 years
- You must have lived in it as your primary residence for at least 2 of the last 5 years
For investment properties, gains are taxed at long-term capital gains rates if held over a year, but depreciation recapture is taxed at up to 25%.
Tax-Loss Harvesting: Offsetting Your Gains
If you have both gains and losses in your portfolio, you can offset gains with losses:
- Short-term losses offset short-term gains first, then long-term gains
- Long-term losses offset long-term gains first, then short-term gains
- Net losses can deduct up to $3,000 against ordinary income per year
- Unused losses carry forward indefinitely to future tax years
Important: The wash-sale rule prevents you from selling a security at a loss and immediately rebuying the same or substantially identical security within 30 days before or after the sale. If you trigger the wash-sale rule, the loss is disallowed.
Cryptocurrency Capital Gains
The IRS treats cryptocurrency as property, not currency. Every time you sell, exchange, or spend crypto, it's a taxable event. The same short-term and long-term rules apply. Mining and staking income is taxed as ordinary income at the time received, and your cost basis is the fair market value on the day you received it.