Capital Gains Tax Rates (2026)

If you hold an investment longer than one year and sell at a profit, the gain is long-term and taxed at one of three federal rates: 0, 15, or 20 percent. Which one applies depends on your total taxable income for the year. Lower-income filers can land in the 0 percent bracket, most middle and upper-middle earners fall in the 15 percent bracket, and only high earners above the top threshold reach 20 percent. These preferential rates are the reward for holding longer than a year, and they are a major reason long-term investing is more tax-efficient than frequent trading.

The income thresholds that separate the three rates are adjusted for inflation every year and differ by filing status, so the exact 2026 dollar cutoffs are the kind of figure worth confirming rather than memorizing. Treat 0, 15, and 20 as the reliable structure, and verify the current dollar boundaries with the IRS or a tax professional before you plan around a specific number. This is general information, not tax advice.

Short-term capital gains get no special treatment at all. If you sell an asset you held for one year or less, the gain is simply added to your other income and taxed at your ordinary income rate, using the same federal brackets that apply to your paycheck. Those ordinary brackets currently run from 10 percent up to 37 percent, so a short-term gain for a high earner can be taxed at nearly double the top long-term rate.

This is the practical heart of why the one-year holding line matters so much. The same 10,000 dollar profit can face a very different bill depending only on whether you sold at eleven months or thirteen. For the mechanics of how that line works and how gains are realized in the first place, see capital gains tax. The ordinary brackets are also inflation-adjusted yearly, so verify current figures. This is not tax advice.

On top of the regular capital gains rate, a separate surtax can apply to higher earners: the Net Investment Income Tax, or NIIT. It adds 3.8 percent to investment income, including capital gains, dividends, and interest, for taxpayers whose modified adjusted gross income exceeds a set threshold. Because it stacks on top of the base rate, a high earner already paying 20 percent on a long-term gain can effectively pay 23.8 percent once the NIIT is included.

The NIIT thresholds are fixed in statute and, unlike the ordinary brackets, are not indexed to inflation, which means more people cross into them over time as incomes rise. Whether the NIIT applies to you depends on your filing status and your full income picture, so if you are a higher earner realizing sizable gains, this is one to confirm with a tax professional. Verify the current threshold with the IRS. This is general information, not tax advice.

Everything above is federal. Most states also tax capital gains, and the treatment ranges enormously. Several states have no income tax and therefore no state tax on gains at all, many states tax capital gains as ordinary income at their own rates, and a few apply special rules or surcharges. Whatever your state does is separate from and on top of the federal rate, so your true combined rate can be well above the federal number alone.

Because the state layer depends entirely on where you live, and can even hinge on residency in the year of a large sale, this guide sticks to the federal structure and leaves the state figure to your own state's rules. Anyone facing a significant gain should factor in the state cost, and a tax professional in your state is the right source for the exact number. This is not tax advice.

None of the rates on this page apply year to year inside a tax-advantaged account. Selling at a profit within a traditional 401k or IRA triggers no capital gains tax; you eventually pay ordinary income tax on withdrawals in retirement. Inside a Roth IRA, qualified withdrawals including all the gains come out tax-free, so the 0, 15, and 20 percent schedule never touches them.

This is a reminder that the rate you pay is not just a function of income and holding period; it also depends on which account the gain occurs in. Positions you expect to trade actively can face repeated short-term rates in a taxable account yet none inside a retirement account. Deciding what belongs where is part of tax-efficient investing, and depends on your individual circumstances. This is general information, not tax advice.

Read the table as the shape of the system, not as a promise about your own bill. The long-term rates of 0, 15, and 20 percent map to income ranges that shift every year, short-term gains ride your ordinary brackets, the 3.8 percent NIIT stacks on top for higher earners, and your state adds its own layer. Every dollar threshold here can change from year to year and depends on your filing status and individual circumstances, so verify the current figures with the IRS or a licensed professional before making any decision.

Your rate depends on inputs Walnut does not decide: your income, filing status, state, and how long you held each position. What an AI assistant that reads across your accounts can do is show you the holding-period and performance side of the picture in plain words. Walnut lets you connect any major US broker, then chat through Claude, ChatGPT, or its built-in AI to see how each position has moved and which ones you have held past the one-year mark. You can build baskets around a plan, track every position against the S&P 500, and place trades that Walnut only sends to your broker after you approve them. It reads your accounts by default and does not move money on its own. Walnut is not an investment adviser or a tax adviser, it does not calculate your tax rate, and it does not tell you what to buy.