A capital gain is the profit when you sell something for more than you paid. How it's taxed depends mostly on how long you owned it.
Short-term vs. long-term
- Owned a year or less: short-term, taxed like your wages at your regular bracket.
- Owned more than a year: long-term, taxed at 0%, 15% or 20%.
2026 long-term rates
| Rate | Single (taxable income) | Married jointly |
|---|---|---|
| 0% | Up to $49,450 | Up to $98,900 |
| 15% | Up to $545,500 | Up to $613,700 |
| 20% | Over $545,500 | Over $613,700 |
The bands count your whole taxable income, so wages fill the 0% band first and the gain stacks on top.
Example: a $20,000 stock gain
A single filer earning $60,000 sells shares bought for $10,000 for $30,000:
- Held over a year: $2,168 in federal tax. $5,550 at 0%, $14,450 at 15%.
- Held a year or less: $3,750, taxed at the same brackets as the wages.
Waiting past the one-year mark saves $1,583 here.
Other rules worth knowing
- Net investment income tax: an extra 3.8% when income passes $200,000 ($250,000 joint).
- Selling your home: up to $250,000 of gain is tax-free ($500,000 joint) if you owned and lived in it 2 of the last 5 years.
- Collectibles and depreciation: collectibles top out at 28%, and depreciation on rental property at 25%.
- Losses: they offset gains, then up to $3,000 a year of other income. The rest carries forward.
- States: most tax gains as regular income.
Try it yourself