Key Takeaways
- Hold an investment more than a year and your profit is taxed at 0%, 15%, or 20%. Sell in a year or less and it’s taxed as ordinary income, up to 37%.
- The 2026 brackets rose with inflation. The 0% rate now reaches $98,900 of taxable income for a married couple filing jointly, and $49,450 for a single filer.
- These rates key off your total taxable income, not the gain by itself. Your gains stack on top of everything else you earn.
- A separate 3.8% surtax kicks in once income passes $200,000 (single) or $250,000 (joint). Congress never indexed those lines to inflation, so more households drift over them every year.
- The biggest savings come from the plainest moves: holding past twelve months, picking the year you sell, and pairing gains with losses.
Long-term capital gains in 2026 are taxed at 0%, 15%, or 20%, depending on your total taxable income. Sell something you held a year or less and the profit is taxed at your ordinary rate instead, which tops out at 37%. The thresholds moved up with inflation this year. But what you actually owe depends less on the rates and more on two things you control: when you sell, and what else lands on your return that year.
Why does the holding period matter so much?
Because it decides which rate schedule you land on, and the gap is big.
Hold an asset a year or less and the profit is a short-term gain. It stacks onto your other income and gets taxed at your ordinary rate, up to 37% in 2026.[1] Hold it more than a year and it becomes long-term, taxed at 0%, 15%, or 20%. Same investment, same profit, very different tax bill.
Here’s how I explain it to clients: check the calendar before you sell. In my experience this one trips people up by accident. They decide to sell, place the order, and never look at the purchase date. If a position is sitting at eleven months and nothing urgent is forcing the sale, waiting a few more weeks can move the whole gain onto the better schedule. That’s not really a strategy, it’s a quick check before you act. It’s also the single highest-return thing on this list.
What are the 2026 capital gains brackets?
The rates stayed at 0%, 15%, and 20%. What changed for 2026 are the income thresholds, which the IRS adjusts each year for inflation.[1]
Here’s the part that trips people up most, said plainly. These brackets apply to your taxable income, meaning your ordinary income plus your long-term gains, after your standard or itemized deduction. They don’t apply to the gain in isolation.
In my book, Your Fiscal Physical, I describe tax brackets as buckets. Each one fills at its own rate before income spills into the next. Your gains pour in on top of everything else, so it’s the combined level that sets your rate. Say you have $90,000 of salary and you realize a $20,000 gain. The $20,000 doesn’t get taxed in a vacuum. It sits on top of the salary, and the combined figure decides the rate. (Figures are hypothetical, for illustration only.)
On the deduction side, the 2026 standard deduction is $32,200 for married couples filing jointly, $16,100 for single filers and anyone married filing separately, and $24,150 for heads of household.[1] If you’re 65 or older, you get an extra $1,650, and that rises to $2,050 if you’re also unmarried.[1] That deduction lowers your taxable income, which for someone near a threshold can pull part of a gain down into a lower bracket.
What is the 3.8% surtax, and does it apply to me?
Above the 0/15/20 structure sits the Net Investment Income Tax. If your modified adjusted gross income tops $200,000 as a single filer or head of household, or $250,000 as a married couple filing jointly, you may owe an extra 3.8% on your investment income. That includes capital gains, dividends, interest, and rental income.[2]
Here’s the catch the brackets don’t have: these thresholds are fixed in the law and never adjust for inflation.[2] That deserves more attention than it gets. Because the lines never move, households drift across them over the years on ordinary raises alone. A couple sitting comfortably under the mark a few years ago can be over it now without changing one thing about how they invest. For someone in the top gains bracket who also owes the surtax, the combined federal rate on long-term gains reaches 23.8%.
How do I actually lower what I owe?
None of this is a loophole. These are ordinary timing and account decisions, and most of them have to happen before you sell, not at tax time.
- Cross the one-year line. Covered above, and still the biggest one.
- Harvest losses against gains. A realized loss offsets a realized gain dollar for dollar. If you’re holding one position that’s down and one that’s up, selling both in the same year nets one against the other. Watch the wash sale rule, which cancels the loss if you buy back a substantially identical investment within 30 days on either side of the sale.
- Pick your year. You usually control the timing of a sale. If this year’s income is unusually high and next year’s will be lower, waiting can drop the gain into a better bracket. It works in reverse too: a low-income year is a chance to sell at a lower rate. Our capital gains tax calculator will show you what a sale looks like against the rest of your income.
- Use the 0% bracket on purpose. This one is badly underused. A retiree in a low-income window, after the last paycheck but before Social Security and required withdrawals begin, can sometimes realize a real long-term gain at a 0% federal rate. The window is usually narrow, and it closes quietly, because nothing announces it. Good tax planning is mostly about spotting windows like this one before they pass.
- Put the right assets in the right accounts. Investments that kick off frequent taxable distributions can sit inside tax-deferred accounts. Assets you plan to hold a long time can sit in taxable accounts, where they get long-term treatment and a step-up in basis at death.
- Give appreciated shares instead of cash. Donating a long-held, appreciated investment to a qualified charity can sidestep the gain entirely while still handing the charity full value.
Can a 0% gain still raise my tax bill?
Yes, and this is the interaction I’d most want you to know about if you’re drawing Social Security.
Capital gains count toward the provisional income figure that decides how much of your Social Security benefit is taxed. Below $25,000 of provisional income for a single filer, or $32,000 for a couple, none of your benefit is taxable.[3] Between $25,000 and $34,000 single, or $32,000 and $44,000 joint, up to half becomes taxable. Above those lines, up to 85% can be.[4]
So a gain that qualifies for the 0% rate on its own can still cost you, by pulling more of your Social Security into the taxable column. The gain is free. The ripple isn’t. This is the sort of thing the math catches and instinct misses, which is why I’d rather run the numbers before a sale than after. We dig into this trap and a few of its cousins on The Fiscal Physical Podcast.
Does my state tax capital gains too?
Depends where you live, and in Nevada it’s a real advantage.
Most states tax capital gains as ordinary income at their own rates. Nevada has no personal income tax, so your long-term gains face no state tax here.[5] For a Nevada resident, the federal figures above are the whole bill. Next to a neighboring state that taxes gains like a paycheck, that gap on a large sale is substantial. Our guide on how Nevada and California taxes compare for retirees walks through the math.
Talk through a sale before you make it
If you’re weighing a sale and want to see how it lands against the rest of your income, you can book a free QuickFit call. No pressure, no sales pitch.
Want to think further ahead on taxes? Grab our free guide, The Retirement Tax Bomb, for a plain walkthrough of the tax bill hiding in your retirement accounts and how to shrink it.
Frequently asked questions
What are the 2026 long-term capital gains tax rates?
0%, 15%, and 20%. For 2026, the 0% rate covers taxable income up to $49,450 for single filers and $98,900 for married couples filing jointly.[1]
Are capital gains taxed on top of my regular income?
Effectively, yes. The brackets apply to your total taxable income, so your ordinary income sets where your gains land. A large gain can even push part of itself into a higher bracket.
What is the difference between short-term and long-term capital gains?
Short-term means you held the asset a year or less, taxed at ordinary rates up to 37%.[1] Long-term means you held it more than a year, taxed at the lower 0/15/20 rates.
Does Nevada tax capital gains?
No. Nevada has no personal income tax, so there’s no state tax on your investment income.[5] Nevada residents owe only the federal amount.
Can I pay 0% on capital gains?
Yes, if your total taxable income stays inside the 0% bracket. It’s most doable in low-income years, and it takes planning the sale ahead of time rather than finding the chance afterward.
This article is provided by Alchemy Wealth Management, an SEC-registered investment adviser, for general educational purposes only. It is not personalized investment, tax, or legal advice, nor an offer, a solicitation, or a recommendation of any strategy or product. Tax and planning outcomes depend on your own circumstances and are not guaranteed. Registration does not imply any particular level of skill or training. For details on our services, fees, and conflicts of interest, see our Form ADV Part 2A and Form CRS at adviserinfo.sec.gov, and talk with a qualified professional about your situation.
Sources
- [1] IRS, Revenue Procedure 2025-32, 2026 inflation-adjusted amounts (capital gains thresholds §4.03, tax rate tables §4.01, standard deduction §4.14). https://www.irs.gov/pub/irs-drop/rp-25-32.pdf
- [2] IRS, Questions and Answers on the Net Investment Income Tax (3.8% surtax thresholds under IRC §1411). https://www.irs.gov/newsroom/questions-and-answers-on-the-net-investment-income-tax
- [3] Social Security Administration, Income Taxes and Your Social Security Benefit. https://www.ssa.gov/benefits/retirement/planner/taxes.html
- [4] IRS, Publication 915, Social Security and Equivalent Railroad Retirement Benefits. https://www.irs.gov/publications/p915
- [5] AARP, Nevada State Tax Guide 2026. https://www.aarp.org/states/nevada/state-tax-guide/