In short: A gain on an asset held more than a year is taxed at 0%, 15% or 20%, depending on your taxable income with the gain included. In 2026 a single filer pays 0% up to $49,450 of taxable income and 15% up to $545,500. A gain held a year or less is taxed as ordinary income. A $70,000 gain on top of $80,000 of other taxable income costs $10,500 in federal tax held long, and $16,286 held short.
Short term and long term
The holding period decides which schedule applies. An asset held for more than one year before it is sold produces a long-term gain or loss. An asset held for one year or less produces a short-term one.
Short-term gains have no schedule of their own. They are added to wages and other ordinary income and taxed through the regular brackets, from 10% up to 37%.
Long-term gains, and qualified dividends, are taxed under a separate schedule with three rates: 0%, 15% and 20%. The rate that applies depends on where the gain falls once it is stacked on top of your other taxable income.
The 2026 thresholds
These are the taxable income levels at which each long-term rate ends, from Revenue Procedure 2025-32:
| Filing status | 0% rate up to | 15% rate up to | 20% rate above |
|---|---|---|---|
| Single | $49,450 | $545,500 | $545,500 |
| Married filing jointly | $98,900 | $613,700 | $613,700 |
| Head of household | $66,200 | $579,600 | $579,600 |
| Married filing separately | $49,450 | $306,850 | $306,850 |
The thresholds are measured against total taxable income, which is income after deductions, with the gain included. That is the part most people miss: the rate on a gain depends on everything else on the return, not on the size of the gain alone.
The capital gains calculator on this site applies the single and married-filing-jointly schedules. Head of household and married-filing-separately filers can use the thresholds in the table with the same arithmetic.
How stacking works
Ordinary income fills the brackets first. The long-term gain sits on top of it, and each part of the gain is taxed at the rate for the band it lands in.
A single filer has $30,000 of ordinary taxable income and a $30,000 long-term gain. Stacked together, the gain runs from $30,000 to $60,000 of taxable income.
- The part from $30,000 to $49,450, which is $19,450, falls in the 0% band: $0.00.
- The part from $49,450 to $60,000, which is $10,550, falls in the 15% band: $1,582.50.
The federal tax on the gain is $1,582.50, an effective 5.28% of the gain. The ordinary income underneath is taxed exactly as it would have been without the sale.
If the same filer's other taxable income had been $10,000 instead, the whole gain would sit below $49,450 and the federal tax on it would be $0.00. A married couple with $50,000 of other taxable income could realize a $40,000 long-term gain and still pay $0.00, because the stack ends at $90,000, below the joint threshold of $98,900.
Short term against long term
The same gains, taxed both ways. Each figure is the calculator's federal tax on the gain alone, with the other income treated as ordinary taxable income for a single filer:
| Gain | Other taxable income | Held more than a year | Held a year or less |
|---|---|---|---|
| $10,000 | $40,000 | $82.50 | $1,200.00 |
| $70,000 | $80,000 | $10,500.00 | $16,286.00 |
| $300,000 | $150,000 | $45,000.00 | $97,671.25 |
At $10,000 on $40,000, the long-term gain is mostly in the 0% band, while the short-term gain is taxed at 12%. At $70,000 on $80,000, the long-term gain is all at 15% and the short-term gain runs through the 22% and 24% bands. The $300,000 row also owes the Net Investment Income Tax described below, the same $9,500.00 either way, on top of the figures shown.
For an asset that is close to the one-year mark, the holding period alone can be worth thousands of dollars.
The 20% rate
The top rate applies only to the part of taxable income above $545,500 for a single filer, or $613,700 for a joint return. A single filer with $100,000 of other taxable income who realizes a $700,000 long-term gain pays 15% on the $445,500 of the gain below $545,500 and 20% on the $254,500 above it: $117,725.00 in total, before the Net Investment Income Tax.
The Net Investment Income Tax
Above certain income levels, a separate 3.8% tax applies to investment income, including capital gains. It is charged on the lesser of net investment income and the amount by which modified adjusted gross income exceeds the threshold:
| Filing status | Threshold |
|---|---|
| Single or head of household | $200,000 |
| Married filing jointly | $250,000 |
| Married filing separately | $125,000 |
The thresholds are fixed in the statute and are not adjusted for inflation.
The capital gains calculator includes this tax. Because it does not ask for adjusted gross income, it uses other taxable income plus the gain as the income measure, which is an approximation: true modified adjusted gross income is usually higher than taxable income, so the calculator can understate the tax for someone near the threshold.
| Example | Federal capital gains tax | Net Investment Income Tax | Total | Share of the gain |
|---|---|---|---|---|
| Single, $300,000 gain on $150,000 | $45,000.00 | $9,500.00 | $54,500.00 | 18.17% |
| Single, $700,000 gain on $100,000 | $117,725.00 | $22,800.00 | $140,525.00 | 20.08% |
| Joint, $1,000,000 gain on $300,000 | $184,315.00 | $38,000.00 | $222,315.00 | 22.23% |
In the first row, income of $450,000 is $250,000 over the single threshold, which is less than the $300,000 gain, so the 3.8% applies to $250,000. In the third, the joint income of $1,300,000 is more than $1,000,000 over the threshold, so the 3.8% applies to the whole gain.
The state layer
Most states tax capital gains as ordinary income under their own rate schedules, on top of federal tax. A few give long-term gains relief, and nine tax no wages at all. For a single filer with a $100,000 long-term gain and $75,000 of other taxable income, the site's state engine gives:
| State | State tax on the gain | How the state treats it |
|---|---|---|
| California | $9,300.00 | Ordinary graduated rates |
| Hawaii | $7,250.00 | Long-term gains capped at 7.25% |
| New Jersey | $6,370.00 | Ordinary graduated rates |
| New York | $5,871.75 | Ordinary graduated rates |
| Illinois | $4,950.00 | Flat 4.95% |
| Colorado | $4,400.00 | Flat 4.4% |
| Montana | $4,100.00 | Separate long-term schedule at 3% and 4.1% |
| Wisconsin | $3,710.00 | 30% of long-term gain excluded |
| Pennsylvania | $3,070.00 | Flat 3.07% |
| South Carolina | $2,917.60 | 44% of long-term gain deducted |
| Arkansas | $1,950.00 | 50% of long-term gain exempt |
| North Dakota | $1,170.00 | 40% of long-term gain excluded |
| Texas | $0.00 | No income tax |
| Washington | $0.00 | Capital gains excise tax only above $278,000 |
These apply each state's rate schedule to the gain stacked on the other income, before state-specific deductions or credits. Add the federal tax and the totals diverge sharply. Federal tax on this gain is $15,000.00, all at 15%, with no Net Investment Income Tax because income stays under $200,000. The combined total is $24,300.00 in California and $15,000.00 in Texas.
What the calculators do not compute
Several real rules sit outside the calculators, and each can change the answer.
- Higher rates on some long-term gains. Gains on collectibles and certain small business stock can be taxed at up to 28%, and the part of a real estate gain that reflects depreciation, unrecaptured section 1250 gain, at up to 25%.
- Losses. Capital losses offset gains first. Net losses beyond that reduce ordinary income by up to $3,000 a year, or $1,500 if married filing separately, and the rest carries forward to later years.
- Selling your home. If you owned and lived in the home for at least two of the five years before the sale, up to $250,000 of gain, or $500,000 on a joint return, can be excluded.
- Cost basis adjustments. Reinvested dividends, improvements to property and inherited assets all change the basis, and so the gain.
Common mistakes
Assuming the whole gain is taxed at one rate. A gain can straddle two bands. In the $30,000 example above, part is taxed at 0% and part at 15%.
Thinking a long-term gain pushes wages into a higher bracket. It stacks on top of ordinary income for the purpose of choosing its own rate, but the tax on wages does not change.
Selling a day too early. More than one year means more than one year. An asset bought on 10 March 2025 has to be sold after 10 March 2026 for the gain to be long term.
Forgetting the 3.8% and the state. At higher incomes the Net Investment Income Tax adds 3.8 points, and state tax can add more than that again.
Try it with your own numbers
The capital gains tax calculator applies the 2026 federal schedule, the short-term brackets and the Net Investment Income Tax to a sale. Each state has its own page, such as the California capital gains tax calculator and the Washington capital gains tax calculator. For how the ordinary brackets work underneath, see 2026 federal income tax brackets and marginal vs effective tax rate.
Frequently asked questions
What are the 2026 long-term capital gains tax brackets?
How long do I have to hold an asset for a long-term gain?
Can I pay 0% tax on capital gains?
Does a capital gain count as income for the 3.8% Net Investment Income Tax?
Do states tax capital gains?
What if I sell at a loss?
Sources
- Internal Revenue Service, Revenue Procedure 2025-32, section 4.03, maximum capital gains rate amounts for tax year 2026. irs.gov/pub/irs-drop/rp-25-32.pdf
- Internal Revenue Service, Topic no. 409, Capital gains and losses, including the holding period, the 25% and 28% rates and the loss limit. irs.gov/taxtopics/tc409
- Internal Revenue Service, Net Investment Income Tax. irs.gov/individuals/net-investment-income-tax
- Internal Revenue Service, Topic no. 701, Sale of your home. irs.gov/taxtopics/tc701
- Washington State Department of Revenue, Capital gains tax. dor.wa.gov/taxes-rates/other-taxes/capital-gains-tax