US capital gains tax explained: rates, thresholds and losses

Short-term or long-term

Almost everything you own for personal or investment use is a capital asset: stocks, funds, crypto, a home. When you sell, the gain is the amount you received minus your adjusted basis, usually what you paid. If you held the asset for more than one year it is a long-term gain; if you held it a year or less, it is short-term.

The difference is the rate. A short-term gain is taxed as ordinary income at your usual rate, up to 37%. A long-term gain gets the lower capital gains rates, so waiting past one year can save real money.

The 2026 long-term rates

The thresholds apply to taxable income: your other income minus deductions, with the gain stacked on top. A single filer with $80,000 of other income has $63,900 of taxable income after the $16,100 standard deduction, already above $49,450, so a $20,000 long-term gain is taxed at 15%: $3,000. As a short-term gain the same $20,000 would be taxed at 22%: $4,400.

• 0% on the part of the gain that falls within taxable income up to $49,450 (single, married filing separately), $98,900 (jointly) or $66,200 (head of household).
• 15% on the part up to $545,500 (single), $306,850 (married filing separately), $613,700 (jointly) or $579,600 (head of household).
• 20% on the part above those amounts.

The extra 3.8% tax

The net investment income tax adds 3.8% on the lesser of your net investment income or the amount your modified adjusted gross income is above $200,000 (single or head of household), $250,000 (married filing jointly) or $125,000 (married filing separately).

With $300,000 of other income and a $100,000 long-term gain, a single filer pays $15,000 at 15% plus $3,800 of net investment income tax, $18,800 in all.

If you have a loss

A capital loss first offsets capital gains. If your losses are more than your gains, you can deduct the lesser of $3,000 ($1,500 if married filing separately) or your net loss from other income. Any loss beyond that carries forward to later years.

Report sales on Form 8949 and summarize them on Schedule D. Your broker sends Form 1099-B with the proceeds, but the cost basis is your responsibility if it is missing or wrong.

Exceptions to know

• Collectibles such as coins and art are taxed at up to 28% on a long-term gain.
• The taxable part of a gain on qualified small business stock can be taxed at up to 28%.
• The unrecaptured gain on real property can be taxed at up to 25%.
• Assets you received as a gift or an inheritance have different basis rules: see IRS Publication 551.

Common mistakes

• Selling just short of the holding period: you need more than one year for the long-term rate.
• Forgetting the cost basis, so the whole sale looks like gain.
• Ignoring state tax, which the federal calculator does not include.
• Forgetting that a big gain can raise your whole taxable income and push you into a higher bracket.
• Leaving a loss unused: it can offset gains and carry forward.