Capital Gains Tax Rates 2026: Complete Guide

The Basics

Short-Term vs. Long-Term Capital Gains

When you sell an investment at a profit, the tax rate depends on how long you held it:

2026 Rates

2026 Long-Term Capital Gains Tax Rates

These thresholds apply to taxable income (after the standard deduction), not gross income. Source: IRS 2026.

Note: Qualified dividends from stocks held more than 60 days are taxed at the same preferential long-term capital gains rates — not as ordinary income.

Net Investment Income Tax (NIIT) — 3.8%

On top of regular capital gains rates, a 3.8% surtax applies to net investment income for taxpayers above the MAGI thresholds. This means high earners face effective capital gains rates of 18.8% or 23.8%.

NIIT applies to capital gains, dividends, interest, rental income, and passive business income — but not wages or self-employment income.

Retirement Opportunity

The 0% Capital Gains Rate: A Retiree’s Most Powerful Tool

The 0% long-term capital gains rate is one of the most valuable — and most underused — tax breaks available to retirees. Here’s how to access it:

How to Stay in the 0% Zone

• Use Roth accounts strategically: Roth withdrawals don't count as taxable income — draw from Roth to cover expenses while selling taxable investments at 0% gains rates
• Time IRA withdrawals carefully: Each traditional IRA dollar withdrawn increases taxable income and can push you out of the 0% bracket
• Use Qualified Charitable Distributions: QCDs from IRAs satisfy RMDs without adding to taxable income
• Consider the standard deduction headroom: With a $30,000 standard deduction (MFJ) + $2,600 extra if both spouses are 65+, you have $129,300 in gross income before hitting the 0% limit

Tax-Gain Harvesting: Resetting Basis at 0%

If you’re in the 0% capital gains bracket, you can sell appreciated investments, pay no tax on the gains, and immediately repurchase them — permanently raising your cost basis. This is called “gain harvesting” or “tax-gain harvesting.”

Unlike tax-loss harvesting (which is limited by the wash-sale rule), gain harvesting has no waiting period — you can sell and repurchase the same security immediately.

How Capital Gains Interact With Social Security Taxes

This is the “double hit” most retirees don’t see coming: long-term capital gains — even gains taxed at 0% — still count toward your provisional income for calculating how much of your Social Security benefit is federally taxable.

Provisional income = AGI + tax-exempt interest + 50% of Social Security. Capital gains are included in AGI. A large gain in one year can push your provisional income above the $34,000 (single) or $44,000 (MFJ) threshold where 85% of SS becomes taxable — adding an effective hidden tax rate of about 8.5 cents per dollar of gain.