Understanding capital gains tax rates is one of the most important steps in managing your investment portfolio efficiently. The United States taxes capital gains—the profit you earn when you sell an asset for more than you paid—at different rates depending on two primary factors: how long you held the asset and your total taxable income for the year. For the 2025 and 2026 tax years, long-term capital gains rates remain at the same preferential 0%, 15%, and 20% tiers, while short-term capital gains continue to be taxed as ordinary income at rates ranging from 10% up to 37%. This page provides a comprehensive overview of all applicable federal rates, additional surtaxes like the Net Investment Income Tax, and a state-by-state overview to help you plan your tax strategy effectively.
Long-Term Capital Gains Tax Rates 2025
Assets held for more than one year qualify for preferential long-term capital gains rates. The rate you pay depends on your taxable income and filing status.
| Tax Rate | Single | Married Filing Jointly | Married Filing Separately | Head of Household |
|---|---|---|---|---|
| 0% | Up to $48,350 | Up to $96,700 | Up to $48,350 | Up to $64,750 |
| 15% | $48,351 – $533,400 | $96,701 – $600,050 | $48,351 – $300,025 | $64,751 – $566,700 |
| 20% | Over $533,400 | Over $600,050 | Over $300,025 | Over $566,700 |
These thresholds are adjusted annually for inflation by the IRS. The 0% bracket is particularly valuable: taxpayers whose total taxable income falls below the threshold can realize long-term capital gains entirely tax-free. This makes strategic gain harvesting in low-income years a powerful tax planning tool, especially for retirees managing withdrawals from taxable accounts.
Long-Term Capital Gains Tax Rates 2026 (Projected)
The 2026 brackets below are projected based on IRS inflation-adjustment trends. Final official numbers will be released by the IRS in late 2025.
| Tax Rate | Single | Married Filing Jointly | Married Filing Separately | Head of Household |
|---|---|---|---|---|
| 0% | Up to $49,300 | Up to $98,600 | Up to $49,300 | Up to $65,900 |
| 15% | $49,301 – $545,900 | $98,601 – $614,350 | $49,301 – $307,175 | $65,901 – $580,100 |
| 20% | Over $545,900 | Over $614,350 | Over $307,175 | Over $580,100 |
The three preferential rate tiers—0%, 15%, and 20%—have remained unchanged since 2003 when the Jobs and Growth Tax Relief Reconciliation Act (JGTRRA) lowered them from the prior 8%, 15%, and 28% schedule. While legislative changes could alter these rates in the future, no major reform proposals affecting the long-term capital gains structure are currently expected to take effect before 2026. The brackets themselves, however, shift each year to account for inflation, meaning more of your gains may fall into the 0% bracket over time.
Short-Term Capital Gains Tax Rates (Ordinary Income)
Assets held for one year or less are taxed at your ordinary income tax rate. These rates apply to wages, salaries, and short-term investment gains alike.
| Tax Rate | Single | Married Filing Jointly | Head of Household |
|---|---|---|---|
| 10% | Up to $11,925 | Up to $23,850 | Up to $17,000 |
| 12% | $11,926 – $48,475 | $23,851 – $96,950 | $17,001 – $64,850 |
| 22% | $48,476 – $103,350 | $96,951 – $206,700 | $64,851 – $103,350 |
| 24% | $103,351 – $197,300 | $206,701 – $394,600 | $103,351 – $197,300 |
| 32% | $197,301 – $250,525 | $394,601 – $501,050 | $197,301 – $250,500 |
| 35% | $250,526 – $626,350 | $501,051 – $751,600 | $250,501 – $626,350 |
| 37% | Over $626,350 | Over $751,600 | Over $626,350 |
Short-term capital gains do not receive any preferential tax treatment. If you sell an asset within 365 days of purchase, your profit is simply added to your other ordinary income—wages, salary, interest—and taxed at your marginal rate. This means a high earner in the 37% bracket could pay more than three times the tax on a short-term gain compared to a long-term gain of the same size. The difference highlights the importance of tracking holding periods carefully. For a detailed breakdown of short-term gains and strategies to minimize them, visit our short-term capital gains tax calculator guide.
Enacted as part of the Affordable Care Act, the Net Investment Income Tax (NIIT) adds a flat 3.8% surtax on top of your regular capital gains tax. It applies when your modified adjusted gross income (MAGI) exceeds the following thresholds:
| Filing Status | MAGI Threshold |
|---|---|
| Single | $200,000 |
| Married Filing Jointly | $250,000 |
| Married Filing Separately | $125,000 |
| Head of Household | $200,000 |
The NIIT applies to the lesser of your net investment income or the amount by which your MAGI exceeds the threshold. For example, a single filer with $220,000 in MAGI and $50,000 in net investment income would owe the 3.8% tax on $20,000 (the excess over the $200,000 threshold), resulting in a $760 surtax.
Combined maximum rate: When the 20% top capital gains rate and the 3.8% NIIT both apply, the effective maximum federal rate on long-term capital gains is 23.8%. For short-term gains at the top bracket, the maximum effective rate reaches 40.8%.
Historical Long-Term Capital Gains Tax Rates
Capital gains tax rates have changed significantly over the decades. The table below shows the top marginal long-term rate for each period.
| Period | Top Rate | Key Legislation |
|---|---|---|
| 2003 – Present | 15% / 20% | JGTRRA (2003), ACA raised to 20% for high earners (2013) |
| 1998 – 2002 | 20% | Taxpayer Relief Act (1997) |
| 1991 – 1997 | 28% | OBRA (1993) |
| 1988 – 1990 | 28% | Tax Reform Act (1986) |
| 1987 | 28% | Transitional year (TRRA 1986) |
| 1979 – 1986 | 20% – 28% | Economic Recovery Tax Act (1981) |
| 1976 – 1978 | 35% | Tax Reform Act (1976) |
Today's top rate of 20% (plus NIIT) is relatively low by historical standards. During the 1970s, the top capital gains rate reached 35% or more. Understanding this history helps contextualize current policy debates and underscores the value of the preferential rates available to long-term investors. The possibility of future rate increases—particularly if Congress seeks new revenue—is one reason some investors choose to realize gains under current law.
State Capital Gains Tax Overview
Most states tax capital gains as ordinary income. A few states offer special treatment or have no income tax at all.
These states do not tax capital gains at the state level:
- • Alaska
- • Florida
- • Nevada
- • New Hampshire (interest & dividends only)
- • South Dakota
- • Tennessee
- • Texas
- • Washington
- • Wyoming
States with lower or flat income tax rates:
- • Colorado — 4.40% flat
- • Illinois — 4.95% flat
- • Indiana — 3.05% flat
- • Massachusetts — 5% flat (some gains exempt)
- • North Carolina — 4.50% flat
- • Pennsylvania — 3.07% flat
- • Utah — 4.65% flat
States with the highest income tax rates on capital gains:
- • California — up to 13.3%
- • New York — up to 10.9% (plus NYC surcharge)
- • Hawaii — up to 11.0%
- • New Jersey — up to 10.75%
- • Oregon — up to 9.9%
- • Minnesota — up to 9.85%
- • Vermont — up to 8.75%
State taxes can significantly increase your total capital gains tax burden. A California resident in the top federal bracket paying 20% plus 3.8% NIIT could owe an additional 13.3% in state tax, bringing the combined marginal rate to over 37%. In contrast, a Florida resident with the same income pays only the 23.8% federal rate. When evaluating investment decisions—especially regarding real estate or business exits—factoring in state tax differences is critical for accurate planning.
Special Capital Gains Tax Rates
Certain asset types are subject to different capital gains rates than the standard 0%/15%/20% schedule.
Art, coins, stamps, precious metals, antiques, and other collectibles are taxed at a maximum rate of 28%, regardless of your income bracket. The 0% and 15% rates do not apply to these assets.
Gains on Section 1202 qualified small business stock held for more than five years may exclude up to 50%, 75%, or 100% of the gain, depending on the acquisition date. The non-excluded portion is taxed at a maximum rate of 28%.
When you sell a depreciable real estate property, the amount of depreciation you previously claimed is "recaptured" and taxed at a flat 25% rate. Any remaining gain is taxed at the standard 0%, 15%, or 20% long-term rate.
Under Section 121, you can exclude up to $250,000 ($500,000 if married filing jointly) of gain on the sale of your primary residence, provided you owned and lived in it for at least two of the five years before the sale.
Long-Term vs. Short-Term: Why the Holding Period Matters
- Taxed at ordinary income rates (10%–37%)
- No preferential treatment
- Plus 3.8% NIIT for high earners
- Effective max: 40.8%
- Preferential rates (0%, 15%, 20%)
- 0% bracket for lower incomes
- Plus 3.8% NIIT for high earners
- Effective max: 23.8%
The difference between short-term and long-term rates can be dramatic. A single filer earning $100,000 who realizes a $50,000 short-term gain would pay approximately $11,000 in federal tax on that gain alone at the 22% ordinary rate. The same gain held long-term would be taxed at 15%, costing just $7,500—a savings of $3,500. For high-income taxpayers, the gap widens further: a short-term gain at 37% versus a long-term gain at 23.8% represents a potential savings of over 13 percentage points. Always check your holding period before selling.