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A long-term capital gain — on something held more than a year — is taxed at 0%, 15% or 20% rather than at ordinary income rates. For 2026 the 0% band runs to $49,450 of taxable income for a single filer and $98,900 for a couple filing jointly; the 20% rate does not begin until $545,500 and $613,700. A separate 3.8% net investment income tax applies above $200,000 and $250,000 of modified adjusted gross income.
Reviewed by Dylan, finance analyst. Figures last checked against the source publications on 2026-09-28.
| Rates on long-term gains | 0% / 15% / 20% | Assets held more than one year |
|---|---|---|
| Rate on short-term gains | Ordinary rates | Held one year or less — taxed as income, up to 37% |
| Net investment income tax | 3.8% | Above $200,000 of MAGI single, $250,000 jointly. Not inflation-indexed |
| Holding period for long-term treatment | More than 1 year | Measured from the day after acquisition to the disposal date |
| Capital loss offset against ordinary income | $3,000 | Per year; the unused balance carries forward indefinitely |
| Single, and married filing separately | 0% to $49,450 | 15% to $545,500 single, $306,850 separately; 20% above |
|---|---|---|
| Married filing jointly, surviving spouse | 0% to $98,900 | 15% to $613,700; 20% above |
| Head of household | 0% to $66,200 | 15% to $579,600; 20% above |
| Estates and trusts | 0% to $3,300 | 15% to $16,250; 20% above |
One year and one day is the line. Sell an asset held for a year or less and the gain is short-term, taxed as ordinary income at rates up to 37%. Hold it past that and the same gain is long-term, taxed at 0%, 15% or 20%. For a higher-rate taxpayer the gap between 37% and 20% is the largest single discount in the individual code, and it turns on a date.
The clock starts the day after acquisition and ends on the disposal date. That is why a sale in late December of the first year and one in early January can be taxed completely differently on an identical gain.
This is the part that surprises people. The $49,450 figure is not an allowance of $49,450 of gains at 0%. It is a point on the taxable income scale: your ordinary income fills the band first, and the gain stacks on top of whatever is left.
A single filer with $40,000 of taxable ordinary income and a $30,000 long-term gain does not get the whole gain at 0%. About $9,450 of it falls below the threshold and is untaxed; the remaining $20,550 is taxed at 15%. Someone with $60,000 of ordinary income and the same gain pays 15% on all of it.
The practical consequence is that the 0% band is genuinely usable, but mostly in a year when other income is low — between jobs, early in retirement before a pension or Social Security starts, or a year with a large deductible expense.
The net investment income tax adds 3.8% to investment income — gains, dividends, interest, rents — above $200,000 of modified adjusted gross income for a single filer and $250,000 for a couple filing jointly. A high earner's real marginal rate on a long-term gain is therefore 23.8%, not 20%.
Two things about those thresholds are worth knowing. They are measured on modified adjusted gross income, not taxable income, so deductions that reduce the capital gains band may not reduce this. And they are statutory rather than inflation-indexed: they have not moved since the tax was introduced in 2013, so each year's inflation pulls more people over them.
Capital losses offset capital gains without limit. Only once gains are exhausted does the limit bite: up to $3,000 of net loss can be set against ordinary income in a year, and anything beyond that carries forward indefinitely.
The carry-forward has no expiry, which makes a large realised loss a durable asset rather than a one-year consolation. It also does not survive you — carry-forwards generally cannot be inherited.
These are the federal figures published by the IRS for the 2026 tax year, filed in 2027. They exclude several regimes that carry their own rates: collectibles at up to 28%, the unrecaptured gain on depreciated property at up to 25%, qualified small business stock, and state capital gains taxes, which many states charge at ordinary income rates.
This is general information rather than tax advice. Anything turning on a specific disposal, a wash sale, a like-kind exchange or the basis of inherited property is worth putting to a tax professional.
Long-term gains are taxed at 0%, 15% or 20%. The 0% band runs to $49,450 of taxable income for a single filer and $98,900 for a couple filing jointly, and 20% starts above $545,500 and $613,700.
More than one year, counted from the day after acquisition to the disposal date. A gain on an asset held one year or less is short-term and taxed as ordinary income, at rates up to 37%.
It is a 3.8% tax on investment income above $200,000 of modified adjusted gross income for a single filer and $250,000 jointly. It makes the top rate on a long-term gain 23.8%, and its thresholds are not adjusted for inflation.
Capital losses offset capital gains without limit. Beyond that, up to $3,000 of net loss a year can be set against ordinary income, and the rest carries forward indefinitely.
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Figures sourced from IRS — Revenue Procedure 2025-32, section 4.03, IRS — Topic no. 409, Capital gains and losses, IRS — Net investment income tax.
Figures on this page apply to the years stated beside them and were last checked against the source publications on 2026-09-28 by Dylan, finance analyst. This page is general information, not financial, tax or legal advice.