Stocks · Real estate · Crypto · Short-term vs long-term · State tax · All filing statuses · 2026
How Capital Gains Tax Works in 2026
Capital gains tax is owed when you sell an asset for more than you paid. The tax rate depends on two things: how long you held the asset (short-term vs long-term) and your total taxable income. Long-term gains (held over 1 year) are taxed at significantly lower rates — this is the biggest legal tax break available to investors.
2026 Long-Term Capital Gains Rates
- 0% — Single filers with taxable income up to $47,025 · Married up to $94,050
- 15% — Single $47,026–$518,900 · Married $94,051–$583,750
- 20% — Single over $518,900 · Married over $583,750
- +3.8% NIIT — Additional tax on investment income over $200K (single) / $250K (married)
Short-Term Rates — Ordinary Income Tax
Short-term gains (held under 1 year) are taxed at your ordinary income tax rate — the same as your salary. This ranges from 10% to 37% depending on your bracket. This is why holding an investment for just one more day past the 1-year mark can save thousands in taxes.
Frequently Asked Questions
What is the capital gains tax on real estate?
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If you sell your primary home, you can exclude up to $250,000 of gains ($500,000 for married couples) if you've lived there for at least 2 of the last 5 years. Gains above this exclusion are taxed at long-term rates if held over a year. Investment properties don't qualify for this exclusion but do qualify for long-term rates after one year. Depreciation recapture (Section 1250) is taxed at 25% for rental properties.
Can I use capital losses to offset gains?
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Yes — this strategy is called tax-loss harvesting. Capital losses offset capital gains dollar for dollar. If your losses exceed your gains, you can deduct up to $3,000 against ordinary income per year, with excess carried forward indefinitely. For stocks and mutual funds, the wash-sale rule prevents you from immediately repurchasing the same security within 30 days of selling at a loss. Crypto currently has no wash-sale rule.
How do I calculate cost basis for stocks?
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Cost basis is what you paid for the asset including commissions and fees. For stocks bought at different times, you can choose FIFO (first in first out — IRS default), LIFO (last in first out), or specific identification (choose exactly which shares to sell). Specific identification gives you the most control and can minimize taxes by selling high-cost-basis shares first.