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Capital Gains Tax Rates 2025 and 2026 — Federal and State
Capital gains tax applies to profits from selling investments — stocks, bonds, mutual funds, real estate, and other assets held outside a retirement account. The rate depends on how long you held the asset. Short-term gains (held one year or less) are taxed as ordinary income at your regular bracket rate. Long-term gains (held more than one year) receive preferential federal rates of 0%, 15%, or 20% based on your total taxable income.
2025–2026 Long-Term Capital Gains Tax Rates (Federal)
| Rate | Single Taxable Income | Married Filing Jointly |
|---|---|---|
| 0% | Up to $47,025 | Up to $94,050 |
| 15% | $47,026 – $518,900 | $94,051 – $583,750 |
| 20% | Over $518,900 | Over $583,750 |
Many middle-income investors pay 0% federal capital gains tax — if your taxable income (after deductions) is under $47,025 as a single filer, long-term gains are federally tax-free. State taxes still apply; California taxes capital gains as ordinary income up to 13.3%, with no favorable rate. Check the state income tax rates guide for your state’s treatment. The calculator above estimates tax on ordinary income; for wage income, use the main US income tax calculator. Married couples should also visit our married filing jointly calculator.
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Capital Gains Tax FAQs — 2025 & 2026
How do I calculate capital gains tax on a stock sale?
Calculate your gain: selling price minus cost basis (what you originally paid, adjusted for reinvested dividends or stock splits). Determine holding period — short-term (≤ 1 year, taxed as ordinary income) or long-term (> 1 year, 0/15/20%). For long-term gains: determine your taxable income including the gain, then apply the appropriate rate. Example: $60,000 salary plus $20,000 long-term gain. After $14,600 standard deduction, taxable income = $65,400 — above the $47,025 threshold, so you pay 15% on the $20,000 gain = $3,000 federal capital gains tax.
What is the Net Investment Income Tax (NIIT)?
The NIIT is an additional 3.8% federal tax on net investment income (including capital gains, dividends, and rental income) for higher-income taxpayers. It applies to the lesser of your net investment income or the amount by which your MAGI exceeds $200,000 (single) or $250,000 (MFJ). So a single filer with $250,000 income and $50,000 in long-term capital gains would pay 15% regular capital gains tax plus 3.8% NIIT on the gains — an effective 18.8% federal rate. High earners in California could face a combined federal + state rate over 33% on capital gains.
Do I owe capital gains tax when selling my home?
Not necessarily. The IRS Section 121 exclusion lets single homeowners exclude up to $250,000 in profit from a primary residence sale ($500,000 for MFJ), provided you lived in the home for at least 2 of the last 5 years. Gains above that threshold are taxed as long-term capital gains. On a home sold for $800,000 that you bought for $400,000, a single filer would exclude $250,000 and owe long-term capital gains tax on $150,000. At the 15% rate, that is $22,500 federal tax plus any applicable state tax.
How do state capital gains tax rates compare?
Most states tax capital gains as ordinary income at regular state rates — so if your state has a 9% top rate, long-term gains are taxed at 9% despite the favorable federal rate. Washington state has no income tax but imposes a 7% capital gains tax on gains above $262,000. California, Oregon, Minnesota, and New Jersey provide no preferential treatment for capital gains. Only a few states offer reduced rates or full exemptions for long-term gains. See our state income tax rates guide for your state’s specific treatment.
Last updated: January 2024
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