How Much Tax Will You Owe on Your Capital Gains?
Under the TCJA (extended by the Big Beautiful Bill), long-term capital gains are taxed at 0%, 15%, or 20% depending on income — dramatically lower than ordinary income rates of up to 37%. High earners also face a 3.8% Net Investment Income Tax (NIIT). The difference between selling at 11 months vs. 13 months can mean thousands in extra tax.
Jon Ragsdale· Chief Investment & Policy Intelligence Officer
Published March 30, 2026
Reviewed by David Duley for factual accuracy, source quality, and clarity.
Capital gains tax is where timing and policy collide. The same asset sale can produce a very different tax result depending on holding period, income, state, and whether surtaxes like NIIT apply. This page helps translate that timing into a real dollar estimate.
It is also a policy-risk page because investment taxes are shaped by thresholds and rules that can stay frozen for years while incomes and asset values rise. The tax burden can change even when your strategy does not.
The difference between short-term and long-term capital gains tax can be enormous. Short-term gains are taxed as ordinary income (up to 37%), while long-term gains get preferential rates (0%, 15%, or 20%). On a $100,000 gain, that difference can be $10,000 or more. Enter your details to see the exact impact.
How PRIA Approached This
This calculator was written by Jon Ragsdale and reviewed by David Duley. PRIA treats tools like this as household policy-risk explainers, not generic widgets. We separate current law from proposals when relevant, translate public rules into plain English, and present the output as an educational estimate rather than personalized advice.
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Frequently Asked Questions
- What is the difference between short-term and long-term capital gains?
- Short-term capital gains apply to assets held for one year or less and are taxed at your ordinary income tax rate (up to 37% in 2026). Long-term capital gains apply to assets held for more than one year and are taxed at preferential rates of 0%, 15%, or 20% depending on your taxable income.
- What are the 2026 long-term capital gains tax brackets?
- For 2026 (under TCJA), the 0% rate applies to taxable income up to $48,350 (single) or $96,700 (married filing jointly). The 15% rate applies up to $533,400 (single) or $600,050 (MFJ). The 20% rate applies above those thresholds. High earners may also owe the 3.8% NIIT.
- What is the Net Investment Income Tax (NIIT)?
- The NIIT is a 3.8% surtax on investment income (capital gains, dividends, interest, rental income) for taxpayers with modified AGI above $200,000 (single) or $250,000 (married filing jointly). These thresholds are not inflation-adjusted, so more taxpayers are affected each year.
- How are capital losses handled?
- Capital losses offset capital gains dollar-for-dollar. If your losses exceed your gains, you can deduct up to $3,000 per year against ordinary income. Remaining losses carry forward indefinitely to future tax years.
- Do all states tax capital gains?
- No. Nine states have no income tax and therefore no capital gains tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Wyoming, and Washington (though WA has a 7% tax on gains above $270K). California has the highest rate at 13.3%, taxing capital gains as ordinary income.
- Can I pay 0% capital gains tax?
- Yes. If your total taxable income (including the gain) falls within the 0% long-term capital gains bracket — up to $48,350 for single filers or $96,700 for married filing jointly in 2026 — you pay zero federal tax on long-term gains. This benefits retirees, part-time workers, and anyone in a low-income year.
Capital gains brackets shift with tax policy. Get alerted when investment tax rules change.
Start Free Watch →Capital Gains Calculator: The Short Answer
Capital gains tax depends first on whether your gain is short-term or long-term, then on how your income interacts with the capital gains brackets and surtaxes. A well-timed sale can save thousands. A poorly timed one can push a gain into a much more expensive tax treatment.
Short-Term vs. Long-Term: The One-Year Line
The single most impactful variable in capital gains taxation is time. Assets held for one year or less are “short-term” and taxed at your ordinary income rate — the same rate as your salary. Assets held for more than one year are “long-term” and qualify for preferential rates: 0%, 15%, or 20%.
For someone in the 32% bracket, selling a $200,000 gain one day too early costs an extra $34,000 in federal tax (32% vs. 15%). That one day of patience is worth more than most annual raises.
2026 Long-Term Capital Gains Brackets
| Rate | Single | Married Filing Jointly |
|---|---|---|
| 0% | Up to $49,450 | Up to $98,900 |
| 15% | $49,450 – $545,500 | $98,900 – $613,700 |
| 20% | Above $545,500 | Above $613,700 |
These thresholds are based on taxable income (after deductions). The 0% bracket means many middle-income investors pay zero federal tax on long-term gains — a benefit that gets little attention.
The 3.8% Net Investment Income Tax (NIIT)
High earners face an additional 3.8% surtax on investment income (capital gains, dividends, rental income, and interest) when their modified AGI exceeds $200,000 (single) or $250,000 (married filing jointly). This effectively raises the top long-term rate to 23.8% and the top short-term rate to 40.8%.
The NIIT thresholds have never been adjusted for inflation since the tax was enacted in 2013, so more taxpayers hit it each year — a form of bracket creep that affects investment income specifically.
State Capital Gains Taxes: The Hidden Layer
Nine states have no income tax (and therefore no capital gains tax): Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington*, and Wyoming. At the other extreme, California taxes capital gains as ordinary income at rates up to 13.3% — the highest in the nation.
*Washington enacted a 7% capital gains tax on gains above $270,000, upheld by the state supreme court in 2023. It applies to stocks, bonds, and other financial assets (not real estate).
Why This Is A Household Policy Risk
Capital gains tax is not only a portfolio issue. It affects when households can rebalance, diversify, sell appreciated assets, or use gains to fund other goals. When thresholds freeze or surtaxes bite harder over time, that friction becomes part of the household plan.
Capital Losses: The Silver Lining
Capital losses offset capital gains dollar-for-dollar. If you have $50,000 in gains and $30,000 in losses, you only pay tax on $20,000. If your losses exceed your gains, you can deduct up to $3,000 per year against ordinary income ($1,500 if married filing separately), with the remainder carried forward indefinitely. This is why tax-loss harvesting — intentionally realizing losses to offset gains — is a common year-end strategy.
Married filing separately taxpayers are generally limited to a $1,500 annual net capital loss deduction. Our calculator applies that lower limit for MFS filers.
Crypto, Opportunity Zones, and Other Special Rules
Crypto is treated as property for federal tax purposes, so gains and losses generally follow capital gains rules based on holding period. Beginning with 2026 reporting, many digital asset transactions are expected to be reported on Form 1099-DA, which can make mismatch errors more visible if basis records are incomplete.
This calculator does not model qualified opportunity zone gain deferral elections, collectibles gains taxed at special rates, or the primary-home sale exclusion ($250,000 single / $500,000 married filing jointly). Treat those as separate planning layers.
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