- You keep
- $8,500
- Tax
- $1,500
Short-term and long-term
- Short-term (held one year or less): taxed at your ordinary income tax rate.
- Long-term (held more than a year): taxed at lower rates, based on your taxable income:
| Rate | Single | Married filing jointly |
|---|---|---|
| 0% | Up to $49,450 | Up to $98,900 |
| 15% | $49,451 to $545,500 | $98,901 to $613,700 |
| 20% | Over $545,500 | Over $613,700 |
These are the 2026 thresholds. They apply to your total taxable income, gains included: your other income fills the bands first, and your long-term gains sit on top.
Example: a married couple with $80,000 of taxable income from their jobs sells shares held for three years at an $18,000 gain. Their taxable income becomes $98,000, still inside the 0% band, so the gain is tax-free at the federal level.
Held a year or less, the same gain would be taxed at their 12% rate: $2,160.
The net investment income tax
If your income is over $200,000 ($250,000 for couples, $125,000 if married filing separately), a 3.8% net investment income tax is added on top. It’s charged on the smaller of your investment income and your income above the threshold, and these amounts don’t rise with inflation.
A few gains are taxed differently: collectibles such as art, coins and gold at up to 28%, and the part of a gain on rental property that comes from depreciation at up to 25%.
State tax
Most states tax capital gains like other income. Eight don’t, including Texas and Florida, and a few have their own rules: Washington taxes only large long-term gains, and some states leave out part of the gain. Our capital gains tax calculator works out the federal and state tax on your own gains.
Losses
Losses from selling investments first cancel out gains. Up to $3,000 more a year ($1,500 if married filing separately) can be taken off other income, and anything left carries forward. If you buy the same investment back within 30 days, the loss doesn’t count (the wash sale rule).
Your home
If you’ve owned and lived in your home for 2 of the last 5 years, up to $250,000 of gain is tax-free, or $500,000 for a married couple filing jointly. You can use this once every two years. Gains above it are taxed at the long-term rates.
Ways to pay less
- Hold for over a year before selling, where it makes sense.
- Invest in a 401(k), IRA or HSA: there’s no capital gains tax inside them.
- Use the 0% band: in a low-income year, you may be able to sell at a gain tax-free.
- Inherited investments get a “stepped-up” cost, so gains during the previous owner’s life aren’t taxed.
See year-end tax moves for what to do before December 31.