Tax year 2026 figures. Last updated .
Three rates, not one
A long-term capital gain — from an asset held more than one year — is taxed at 0%, 15% or 20% federally. Which of the three applies is decided by your total taxable income for the year, not by the size of the gain and not by the type of asset.
For 2026 a single filer pays 0% while total taxable income stays at or below $49,450, 15% up to $545,500, and 20% above that. Filing jointly the two ceilings are $98,900 and $613,700. Head of household sits between them at $66,200 and $579,600. Married filing separately gets the single 0% ceiling of $49,450 but a 15% ceiling of only $306,850 — roughly half the joint figure, which is one of several reasons that status rarely helps.
The zero band is genuinely zero
This is the part most summaries mention and few explain. The 0% band is not a deferral, a credit, or an allowance that gets clawed back later. A single filer whose total taxable income including the gain stays at or below $49,450 pays no federal tax on that long-term gain at all.
It is reachable more often than people expect: a year between jobs, a sabbatical, an early retirement before pensions start, a year when business losses offset other income. Realising a gain deliberately in such a year — sometimes called harvesting the gain, as opposed to harvesting a loss — can convert a future 15% bill into a present 0% one and reset the basis upward at the same time.
Stacking: the gain sits on top
The ladder is not applied to the gain in isolation. Your ordinary income fills the lower bands first, and the long-term gain is laid on top of it. So the rate the gain reaches depends on how much room your other income has already used.
A consequence that surprises people: one gain can straddle two rungs. A single filer with $500,000 of taxable income and a $100,000 long-term gain sees part of that gain taxed at 15% up to the $545,500 ceiling and the remainder at 20%. There is no single rate on that gain, and averaging the two produces a number that appears nowhere on the return.
The order is set by IRC § 1(h) and it is strict: ordinary income first, then unrecaptured § 1250 gain at up to 25%, then 28% collectibles gain, then the adjusted net capital gain on the 0/15/20 ladder.
Two rates that sit outside the ladder
Not every long-term gain uses 0/15/20. Gains on collectibles — art, coins, precious metals, wine — are capped at 28% rather than 20%. The portion of a real-estate gain attributable to depreciation you claimed is unrecaptured section 1250 gain, capped at 25%.
Both are maximums rather than flat rates. If your ordinary rate is below the cap, the lower rate applies. A calculator that charges a flat 25% on every dollar of depreciation recapture will overstate the bill for a modest earner.
The 3.8% that is not part of the ladder
The net investment income tax adds 3.8% on top, for filers whose modified adjusted gross income exceeds $200,000 single or $250,000 jointly. It is a separate tax under IRC § 1411, not a fourth rung, and it is charged on the lesser of your net investment income and your excess over the threshold.
Those thresholds are fixed in statute and have never been indexed for inflation, so they capture more filers every year. In practice the top federal rate on a long-term gain is 23.8%, not 20%.
Where these figures come from
The 2026 ceilings above are read from IRS Revenue Procedure 2025-32, section 4.03. They are inflation-adjusted annually, so a page quoting 2025 figures is quoting the wrong ladder. The rate structure itself — the three rungs, the stacking order, the 25% and 28% caps — is statutory and does not move with inflation.
Qualified dividends ride the same ladder
Qualified dividends are not capital gains, but they are taxed as though they were. They join the adjusted net capital gain and use the same 0/15/20 ceilings, which means dividend income quietly consumes the room a gain would otherwise have used.
To be qualified, a dividend must come from a US corporation or a qualifying foreign one, and you must have held the stock for more than 60 days during the 121-day window around the ex-dividend date. Dividends that fail that test are ordinary income and taxed on the ordinary table.
The practical consequence: a portfolio throwing off substantial qualified dividends can push a later gain from 15% into 20% without a single share being sold.
What actually counts as long-term
More than one year of holding, counted from the day after acquisition to the day of disposal. Exactly one year is short-term.
Some holding periods are inherited rather than earned. Assets acquired from a decedent are automatically long-term regardless of how briefly the heir held them. A recipient of a gift generally takes on the donor’s holding period along with their basis, so an asset given to you last week may already be long-term.
Other rules cut the other way. Short sales, straddles and certain options positions can suspend or reset a holding period, and the wash sale rule adds the disallowed loss to the basis of the replacement shares while carrying the original holding period across. Those are outside what this calculator models, and they are worth checking with a professional if they apply.
Working out your own headroom
The most useful thing to do with the ceilings is not to look up a rate but to compute how much gain fits below the next one.
Take the ceiling for your filing status. Subtract your taxable income without the gain — that is gross income less the standard or itemised deduction. What remains is how much long-term gain you can realise before the rate steps up.
A single filer with $70,000 of wages has taxable income of about $53,900 after the $16,100 standard deduction. Against the $545,500 fifteen-percent ceiling that leaves roughly $491,600 of headroom at 15%. Against the $49,450 zero-rate ceiling there is none — that band was used up by salary before any gain arrived.
The same arithmetic done at the other end of the year is what makes splitting a disposal across two tax years worth considering: two lots of headroom rather than one. The comparison panel beneath the calculator’s results computes this figure automatically for whatever inputs are on screen.
Losses come off before the rate is chosen
The ladder is applied to your net long-term gain, not to each sale in isolation. Losses realised in the same year reduce the amount that reaches the ceilings, and can therefore change which rung you land on rather than merely reducing the bill at a fixed rate.
That is a meaningful distinction. A $60,000 loss against a $200,000 gain does not just save 15% of $60,000 — it may keep the remaining $140,000 entirely below a ceiling the full amount would have crossed, which is worth more than the arithmetic suggests.
Carried-forward losses from prior years work the same way and keep their long or short character, so a long-term carryforward reduces long-term gain first.
Worked example
Computed by the same engine that powers the calculator, at the moment this page was built — not typed in by hand. Open the derivation to see every rule and citation.
A gain that straddles the 15% and 20% rungs
A single filer with $500,000 of wages realises a $150,000 long-term gain. The gain starts inside the 15% band and crosses the $545,500 ceiling partway through.
- Taxable income after deduction
- $633,900
- Taxable gain
- $150,000
- Tax owed without the sale
- $138,134.25
- Tax the sale added
- $32,620
- of which net investment income tax
- $5,700
- Total federal tax
- $170,754.25
- Effective rate on the gain
- 21.75%
Open the derivation and you will see two separate lines for the gain, one at 15% and one at 20%, plus the net investment income tax on top. No single percentage describes this gain.
Caveats on this example (1)
- Net investment income was derived from capital gains and qualified dividends only. Interest, non-qualified dividends, rents, royalties and passive business income inside ordinaryIncome are also net investment income under IRC 1411(c) and are not counted here.
Show the working — 16 steps, each with its citation
- Net short-term capital gain or loss for the year$0
Assets held one year or less. Taxed at ordinary rates if a net gain.
- Net long-term capital gain or loss for the year$150,000
Assets held more than one year. Eligible for the 0/15/20% rates.
- Standard deduction-$16,100
Adjusted gross income of $650,000 less $16,100.
- Taxable income$633,900
The figure the rate tables and the capital gain ceilings are both measured against.
- Ordinary income taxed at 10%$1,240
$12,400 of taxable income between $0 and $12,400.
- Ordinary income taxed at 12%$4,560
$38,000 of taxable income between $12,400 and $50,400.
- Ordinary income taxed at 22%$12,166
$55,300 of taxable income between $50,400 and $105,700.
- Ordinary income taxed at 24%$23,058
$96,075 of taxable income between $105,700 and $201,775.
- Ordinary income taxed at 32%$17,424
$54,450 of taxable income between $201,775 and $256,225.
- Ordinary income taxed at 35%$79,686.25
$227,675 of taxable income between $256,225 and $483,900.
- Ordinary income stacked below the long-term gain$483,900
Long-term gain is taxed by reference to where it sits ON TOP of $483,900 of other taxable income, not from the bottom of the rate table.
- Long-term gain taxed at 15%$9,240
Gain between the $49,450 zero-rate ceiling and the $545,500 15% ceiling.
- Long-term gain taxed at 20%$17,680
Gain above the $545,500 maximum 15% rate amount.
- Net investment income tax threshold$200,000
Modified AGI of $650,000 against the $200,000 threshold for a single filer. This threshold is statutory and is not adjusted for inflation.
- Net investment income tax at 3.8%$5,700
3.8% of $150,000, the lesser of net investment income ($150,000) and the amount by which modified AGI exceeds the threshold ($450,000). Here the binding figure is net investment income.
- Total tax$170,754.25
$170,754.25 on $650,000 of total income, an effective rate of 26.27%.
Run your own figures
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