Capital Gains Tax Rate 2026: Complete 2026 Guide to Brackets, NIIT, and Smart Sale Timing

Capital gains decisions are where planning beats guessing. The capital gains tax rate 2026 framework is straightforward on paper, but your real bill depends on timing, filing status, taxable income, holding period, and whether NIIT applies. A one-week delay or an extra loss harvest can move thousands of dollars.

The IRS announced 2026 inflation adjustments in IR-2025-103 and Revenue Procedure 2025-32. Those 2026 thresholds generally apply to returns filed in 2027. Think in terms of taxable income, not gross income, and model your sale before you click sell.

Capital Gains Tax Rate 2026 Brackets by Filing Status

2026 federal long-term capital gain brackets

Source framework: IRS Revenue Procedure 2025-32 under section 1(h) and section 1(j)(5).

How to read this correctly:

• These brackets apply to net long-term capital gains, generally assets held more than one year.
• They stack on top of your taxable ordinary income.
• The boundary is taxable income after deductions, not salary alone.

Short-term gains are different:

• Assets sold at one year or less are taxed as ordinary income.
• For 2026, ordinary federal brackets still run from 10% to 37%.
• Per IRS 2026 inflation guidance, the 37% bracket starts at $640,600 for single filers and $768,700 for married filing jointly.

Short-Term vs Long-Term: Why Holding Period Is a Six-Figure Lever

If you sell on day 364, that gain is short-term and taxed at your ordinary rate. If you sell on day 366, you may qualify for long-term rates. That difference can be dramatic.

Example:

• Taxpayer in a 32% ordinary bracket realizes a $100,000 gain.
• Short-term federal tax could be about $32,000.
• If long-term and within the 15% band, federal tax could be about $15,000.
• Potential spread: about $17,000 before NIIT and state tax.

Decision framework:

1. Confirm purchase date and whether you are safely over one year.
2. Estimate your 2026 taxable income without the sale.
3. Layer in the potential gain and identify which portions hit 0%, 15%, and 20%.
4. Decide whether delaying to cross one year or splitting the sale across years improves results.

Hidden Layer: NIIT, Special Buckets, and State Tax Drag

Most people stop at 0%, 15%, and 20%. That is incomplete.

NIIT can add 3.8%

IRS Topic No. 559 states NIIT applies at 3.8% on the lesser of:

• Net investment income, or
• MAGI above threshold amounts.

Common thresholds:

• $200,000 for single and head of household
• $250,000 for married filing jointly
• $125,000 for married filing separately

These NIIT thresholds are statutory and not indexed for inflation. That means more households can drift into NIIT over time.

Some gains are not capped at 20%

IRS Topic No. 409 and related Schedule D instructions flag special categories:

• Collectibles and some section 1202 gains can face up to 28%.
• Unrecaptured section 1250 gain can face up to 25%.

If you sold rental property, artwork, or concentrated business equity, do not assume everything is 0%, 15%, or 20%.

State taxes matter

Federal planning can be excellent and still miss the big picture. Your state may tax capital gains at ordinary rates, offer partial preferences, or have no income tax. Run both federal and state estimates before making the final sale plan.

Scenario Table: What Different 2026 Households Might Owe

The table below isolates federal long-term capital gain tax for illustration only. It excludes ordinary tax on wages and excludes state tax.

How to use this:

• Build your own row with your expected taxable ordinary income and planned net gain.
• Fill the 0% bucket first, then 15%, then 20%.
• Add NIIT if MAGI crosses the statutory threshold.
• Stress-test with a second row if income comes in 10% higher than expected.

Fully Worked Numeric Example With Assumptions and Tradeoffs

Assumptions:

• Filing status: married filing jointly.
• 2026 taxable ordinary income before capital gains: $260,000.
• Planned long-term gain sale from broad-market ETFs: $220,000.
• Available unrealized long-term loss: $70,000 in a separate position.
• No large above-the-line adjustments modeled.
• Goal: raise cash while minimizing federal tax drag.

Plan A: Sell winners only

• Net long-term gain: $220,000.
• 0% LTCG room: none, because taxable ordinary income already exceeds $98,900.
• 20% threshold starts at $613,700.
• Taxable income with gain: $480,000, so all gain remains in 15% band.
• LTCG tax: $220,000 x 15% = $33,000.

NIIT estimate:

• MAGI approximation: $260,000 + $220,000 = $480,000.
• Excess over $250,000 threshold: $230,000.
• Lesser of NII ($220,000) or excess ($230,000) is $220,000.
• NIIT: $220,000 x 3.8% = $8,360.

Total federal tax tied to the gain in Plan A:

• $33,000 + $8,360 = $41,360.
• Effective federal rate on gain: about 18.8%.

Plan B: Harvest losses before year-end and still raise cash

• Realize the $70,000 long-term loss intentionally.
• Net long-term gain: $220,000 - $70,000 = $150,000.
• Since taxable income still remains below the 20% threshold, gain is still in the 15% band.
• LTCG tax: $150,000 x 15% = $22,500.

NIIT estimate:

• MAGI approximation: $260,000 + $150,000 = $410,000.
• Excess over threshold: $160,000.
• Lesser of NII ($150,000) or excess ($160,000) is $150,000.
• NIIT: $150,000 x 3.8% = $5,700.

Total federal tax tied to the gain in Plan B:

• $22,500 + $5,700 = $28,200.

Tax impact:

• Estimated federal tax savings from loss harvesting: $13,160.

Tradeoffs to acknowledge:

• Wash sale rules can disallow losses if you buy substantially identical securities within 30 days before or after the sale.
• Swapping to a not-identical fund can reduce wash-sale risk but may change tracking and costs.
• If you keep deferring gains forever, concentration risk and lifestyle liquidity needs can become bigger problems than taxes.

Step-by-Step Implementation Plan for 2026

1. Build your gain inventory.
   List each position with acquisition date, cost basis, unrealized gain or loss, and expected sale amount.

2. Separate by holding period.
   Tag every lot as short-term or long-term so you do not accidentally convert a low-tax plan into a high-tax one.

3. Project taxable income before gains.
   Use year-to-date paystubs, business income, and deduction assumptions. Focus on taxable income, not gross.

4. Map your bracket capacity.
   Calculate how much room you have in 0% and 15% long-term bands for your filing status.

5. Pair gains with losses deliberately.
   Harvest losses where portfolio quality and risk goals still make sense. Avoid superficial tax moves that damage long-term allocation.

6. Model NIIT and state tax.
   Add a NIIT check and a state estimate. This is often where surprises happen.

7. Execute in tranches.
   For large positions, split sales into rounds so you can adjust for market movement and updated year-to-date income.

8. Handle payment mechanics.
   If needed, increase withholding or quarterly estimates. Many taxpayers use prior-year safe harbor logic, often 100% of prior-year total tax or 110% at higher incomes, to reduce underpayment penalty risk.

9. Archive support.
   Save broker confirms, basis records, and your planning worksheet so your preparer can reconcile Form 8949 and Schedule D cleanly.

30-Day Checklist to Control Your 2026 Capital Gains Outcome

Use this as an execution sprint, not a theoretical exercise.

Day 1 to 3:

• [ ] Export realized and unrealized gain-loss report from every brokerage account.
• [ ] Confirm missing basis lots and correct any inherited or transferred lot errors.
• [ ] Flag positions near the one-year holding mark.

Day 4 to 7:

• [ ] Draft a tax estimate with and without proposed sales.
• [ ] Calculate your 0%, 15%, and 20% long-term bracket room.
• [ ] Run a NIIT check at current projected MAGI.

Day 8 to 12:

• [ ] Identify loss-harvest candidates that still fit your risk plan.
• [ ] Select replacement securities that are similar but not substantially identical.
• [ ] Set a trade calendar that avoids accidental wash-sale overlap.

Day 13 to 18:

• [ ] Execute first tranche of sales.
• [ ] Recalculate year-to-date gains and updated tax projection within 24 hours.
• [ ] Decide whether second tranche should happen in 2026 or be deferred.

Day 19 to 24:

• [ ] Coordinate with retirement and deduction decisions.
• [ ] Review related reads on best tax deductions for high-income earners and best tax deductions for self-employed if relevant.
• [ ] If real estate is in play, compare deferral paths through 1031 exchange vs itemized deductions.

Day 25 to 30:

• [ ] Finalize estimated payment or withholding changes.
• [ ] Send your CPA a clean summary sheet with assumptions and executed trades.
• [ ] Save all documents in one folder for return prep.

How This Compares to Alternatives

Capital gains bracket management is one tool, not the only tool.

For deeper comparisons, review 1031 exchange vs standard deduction, the Tax Strategies hub, and the broader blog.

When Not to Use This Strategy

Do not force gain realization just because a planner says 15% is low.

This strategy may be a poor fit when:

• You expect materially lower taxable income next year and can defer without harming your portfolio.
• The sale would break risk controls, such as dumping diversified holdings to chase a tax result.
• You need liquidity but have cheaper funding options than selling highly appreciated assets now.
• You are inside a high-tax state year but can relocate legally next year with clear documentation.
• Your records are incomplete and basis uncertainty could create filing errors.

In these cases, the correct move may be to delay, stage sales, or prioritize non-tax portfolio risk first.

Common Mistakes That Increase Capital Gains Tax

1. Confusing taxable income with gross income.
   LTCG brackets are keyed to taxable income, so missing deductions can misclassify your expected rate.

2. Ignoring NIIT until filing season.
   A plan that looks like 15% can become 18.8% quickly when NIIT applies.

3. Triggering wash sales.
   Selling for a loss and buying substantially identical shares inside the 30-day window can defer or disallow the deduction.

4. Mixing short-term and long-term lots accidentally.
   One wrong lot selection can move gains from 15% to your ordinary bracket.

5. Not planning estimated tax.
   Large gains without withholding updates can create penalty exposure even if you can pay the bill.

6. Forgetting special gain categories.
   Collectibles, section 1202, and unrecaptured section 1250 amounts can have different maximum rates.

7. Treating tax software as a strategy engine.
   Software is useful for filing, but it does not design timing decisions automatically.

8. Making tax decisions without portfolio context.
   Saving tax but creating concentration risk is not a real win.

Questions to Ask Your CPA/Advisor

Bring these questions before executing large sales:

• Based on my projected taxable income, how much of my 2026 gain can stay in 0% or 15% bands?
• If I realize this gain, what is my estimated NIIT exposure?
• Which lots should I sell first for best tax-basis outcome?
• Can I harvest losses without violating wash-sale rules in any linked account, including IRA accounts?
• Does my state treat capital gains differently from ordinary income?
• Are any of my gains likely to be taxed in 25% or 28% buckets?
• Should I split this sale across late 2026 and early 2027?
• How should I adjust estimated taxes or withholding this quarter?
• If real estate is involved, is 1031 deferral realistic for my timeline and asset goals?
• Do charitable gifting strategies fit my cash-flow and deduction profile?
• What documentation do you need now so filing is clean later?
• Which assumptions in my model are most likely to be wrong?

A useful planning workflow is to run one base case and two stress cases. Use your base case for execution, keep one upside-income case and one downside-income case for contingency decisions.

Next step: If you want a broader tax reduction map beyond capital gains, review Tax Strategies, explore programs, and build a personalized plan from your current portfolio and income trajectory.