Written by 
Edited by 
Edited by 
Reviewed by 
Investing is all about making your money work for you – getting money without having to actually perform labor. But what some investors may initially neglect to take into account is the fact that investment gains mean investment income, and investment income means taxes on investment income. A financial advisor can help you create a tax plan to maximize your investments. Here’s a breakdown the tax rates for your capital gains in 2026.
What Are Capital Gains?
Capital gains refer to the money that an investor makes as the profit from selling one or more of their investments or assets. Making a profit means the investor now has income, of course, so this must be factored in when filing taxes. When an investor realizes a capital gain, any proceeds will be considered taxable income.
Capital gains vary depending on how long an investor had owned the asset before selling it. Long-term capital gains come from assets held for over a year. Short-term capital gains come from assets held for under a year.
Based on filing status and taxable income, long-term capital gains are taxed at 0%, 15% and 20%. Short-term gains are taxed as ordinary income.
Long-Term Capital Gains Tax Rates for 2026
Here are the income brackets used to calculate long-term capital gains in 2026:
| Tax Rate | Individuals | Married Filing Jointly | Head of Household | Married Filing Separately |
|---|---|---|---|---|
| 0% | $0 – $49,450 | $0 – $98,900 | $0 – $66,200 | $0 – $49,450 |
| 15% | $49,450 – $545,500 | $98,900 – $613,700 | $66,200 – $579,600 | $49,450 – $306,850 |
| 20% | $545,500+ | $613,700+ | $579,600+ | $306,850+ |
Short-Term Capital Gains Tax Rates for 2026
Since short-term capital gains are taxed as ordinary income, short-term capital gains taxes mirror the federal income tax brackets, which also factor in filing status. Here are the short-term capital gains tax rates for 2026:
| Rate | Single | Married Filing Jointly | Married Filing Separately | Head of Household |
|---|---|---|---|---|
| 10% | $0 – $12,400 | $0 – $24,800 | $0 – $12,400 | $0 – $17,700 |
| 12% | $12,400 – $50,400 | $24,800 – $100,800 | $12,400 – $50,400 | $17,700 – $67,450 |
| 22% | $50,400 – $105,700 | $100,800 – $211,400 | $50,400 – $105,700 | $67,450 – $105,700 |
| 24% | $105,700 – $201,775 | $211,400 – $403,550 | $105,700 – $201,775 | $105,700 – $201,775 |
| 32% | $201,775 – $256,225 | $403,550 – $512,450 | $201,775 – $256,225 | $201,775 – $256,200 |
| 35% | $256,225 – $640,600 | $512,450 – $768,700 | $256,225 – $384,350 | $256,200 – $640,600 |
| 37% | $640,600+ | $768,700+ | $384,350+ | $640,600+ |
Long-Term Capital Gains Tax Rates for 2025
For reference, here’s a look at the long-term capital gains tax rates for 2025:
| Rate | Single | Married Filing Jointly | Married Filing Separately | Head of Household |
|---|---|---|---|---|
| 0% | 0 – $48,350 | 0 – $96,700 | $0 – $48,350 | $0 – $64,750 |
| 15% | $48,351 – $533,400 | $96,701 – $600,050 | $48,351 – $300,000 | $64,751 – $566,700 |
| 20% | $533,401+ | $600,051+ | $300,001+ | $566,701+ |
Short-Term Capital Gains Tax Rates for 2025
As with the tax rates in 2026, the federal income tax brackets are used to calculate short-term capital gains taxes in 2025. Here are those rates:
| Rate | Single | Married, Filing Jointly | Married, Filing Separately | Head of Household |
|---|---|---|---|---|
| 10% | $0 – $11,925 | $0 – $23,850 | $0 – $11,925 | $0 – $17,000 |
| 12% | $11,926 – $48,475 | $23,851 – $96,950 | $11,926 – $48,475 | $17,001 – $64,850 |
| 22% | $48,476 – $103,350 | $96,951 – $206,700 | $48,476 – $103,350 | $64,851 – $103,350 |
| 24% | $103,351 – $197,300 | $206,701 – $394,600 | $103,351 – $197,300 | $103,351 – $197,300 |
| 32% | $197,301 – $250,525 | $394,601 – $501,050 | $197,301 – $250,525 | $197,301 – $250,500 |
| 35% | $250,526 – $626,350 | $501,051 – $751,600 | $250,526 – $375,800 | $250,501 – $626,350 |
| 37% | $626,351+ | $751,601+ | $375,801+ | $626,351+ |
How Are Capital Gains Calculated and Reported?
To calculate capital gains, you’ll need your basis, or the cost of the asset when you paid for it. Gains aren’t a guaranteed outcome, however. Investors may incur capital losses, meaning that the basis amount was more than the amount they eventually sold the asset for. Capital losses can be used to offset capital gains on taxes, but they must first offset capital gains of the same type.
Taxpayers who make sales during the tax year will have to report their gains and losses to the IRS on Form 1040, Schedule D, “Capital Gains and Losses.” They must first list all sales that result in these gains or losses on Form 8949, “Sales and Other Dispositions of Capital Assets.”
Estimate your overall income tax liability with our calculator to see how your earnings may affect what you owe.
Income Tax Calculator
Calculate your federal, state and local taxes for the 2025 tax year.
Your 2025 Total Income Taxes
Federal Income & FICA Taxes
State Taxes
Local Taxes
About This Calculator
Our income tax calculator calculates your federal, state and local taxes based on several key inputs: your household income, location, filing status and number of personal exemptions.
How Income Taxes Are Calculated
-
First, we calculate your adjusted gross income (AGI) by taking your total household income and reducing it by certain items such as contributions to your 401(k).
-
Next, from AGI we subtract exemptions and deductions (either itemized or standard) to get your taxable income. Exemptions can be claimed for each taxpayer.
-
Based on your filing status, your taxable income is then applied to the tax brackets to calculate your federal income taxes owed for the year.
-
Your location will determine whether you owe local and / or state taxes.
When Do We Update? - We check for any updates to the latest tax rates and regulations annually.
Customer Service - If you would like to leave any feedback, feel free to email info@smartasset.com.
Assumptions
Deductions
- "Other Pre-Tax Deductions" are not used to calculate state taxable income.
Credits
- The only federal credit automatically calculated is the Savers Credit, depending on your eligibility.
- We do not apply any refundable credits, like the Child Tax Credit or Earned Income Tax Credit (EITC).
- We do not apply state credits in our calculations.
Itemized Deductions
- If itemizing at the federal level, you may need to itemize at the state level too. Some states don't allow itemized deductions, which is accounted for in our calculations.
- When calculating the SALT deduction for itemized deductions, we use state and local taxes, and we assume your MAGI.
- We assume that there is no cap to itemized deductions, if a state allows them.
- We do not categorize itemized deductions (such as medical expenses or mortgage interest), which could be subject to specific caps per state.
Local Tax
- Depending on the state, we calculate local taxes at the city level or county level. We do not include local taxes on school districts, metro areas or combine county and city taxes.
- With the exception of NYC, Yonkers, and Portland/Multnomah County, we assume local taxes are a flat tax on either state taxable income or gross income.
Actual results may vary based on individual circumstances and changes in tax laws or IRS regulations. Estimates provided by this calculator do not guarantee income tax amounts or rates. Past performance is not indicative of future results.
SmartAsset.com does not provide legal, tax, accounting or financial advice (except for referring users to third-party advisers registered or chartered as fiduciaries ("Adviser(s)") with a regulatory body in the United States). Articles, opinions and tools are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual. Users should consult their accountant, tax advisor or legal professional to address their particular situation.
How Ordinary Income Affects Capital Gains Tax Rates
Your ordinary income plays a direct role in determining the tax rate you pay on long-term capital gains. While long-term gains are taxed at preferential rates of 0%, 15% or 20%, those thresholds are based on your total taxable income, which includes wages, interest, retirement income and other earnings. As your ordinary income rises, it can push more of your capital gains into a higher tax bracket.
Importantly, ordinary income is effectively “stacked” first, with capital gains layered on top. This means your wages and other income fill up the lower tax brackets before any long-term capital gains are applied.
For example, if your income already places you near the top of the 0% capital gains bracket, even a relatively small gain could cause a portion of that income to be taxed at 15%. Because of this interaction, the timing of both income and asset sales can influence your overall tax liability.
Bottom Line
Capital gains can be tricky, especially if you wait too long to understand how they complicate your financial situation at tax time. But knowing how long you will hold assets before selling, what the purchase and sales prices could be, as well as your tax filing status and income bracket can help you calculate how much you could owe in taxes.
Tips for Investors
- Taxes can be stressful and confusing. That’s where a financial advisor’s insight and guidance are quite valuable. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Use SmartAsset’s free income tax calculator to get a quick estimate of what you’ll owe the federal government.
Photo credit: ©iStock.com/Korrawin, ©iStock.com/Jirapong Manustrong, ©iStock.com/Geber86