Capital Gains Tax Brackets 2026: Rates, Thresholds & the 0% Bracket

Most people assume every dollar of income is taxed the same. It isn't. Long-term capital gains and qualified dividends have their own, much lower tax brackets — and if you understand how they work, you can pay 0% on investment profits that a misunderstanding would tax at 15% or 23.8%.

This page is the reference. Bookmark it. It has the current brackets, the thresholds, and the one rule that makes the whole system make sense.

The 2026 Long-Term Capital Gains Brackets

Long-term capital gains (assets held more than one year) and qualified dividends are taxed at three rates — 0%, 15%, and 20% — based on your taxable income. These are the 2026 tax-year thresholds:

On top of these, a 3.8% Net Investment Income Tax (NIIT) surcharge applies to investment income when your modified adjusted gross income (MAGI) exceeds $200,000 (single) or $250,000 (married filing jointly). That effectively makes the top long-term rate 23.8%.

Brackets are indexed for inflation every year — the IRS publishes the next year's thresholds each fall. Always verify the current-year numbers before acting.

Short-Term Gains Are Different

The brackets above only apply to long-term gains. Assets held one year or less produce short-term capital gains, which are taxed as ordinary income — the same 10% to 37% brackets that apply to your paycheck.

The holding period is measured from the day after you buy to the day you sell. Selling on day 365 is short-term; waiting until day 366 flips the same profit into the long-term brackets. That one day can be worth 15–20 percentage points of tax.

The Stacking Rule (This Is the Part Everyone Misses)

You don't get to choose which bracket your gains land in. Your ordinary income fills the brackets first, and capital gains stack on top.

Here's why it matters. Say you're married filing jointly with $80,000 of taxable ordinary income. Your gains don't start in the 0% bracket — they start after the $80,000 is counted. The 0% bracket for MFJ goes up to $99,300, so you have $19,300 of room to realize gains at 0%.

Now say your ordinary income is $150,000 (married). Your gains stack starting at $150,000 — already past the $99,300 0% threshold. Every dollar of gains is taxed at 15% (or 18.8% with NIIT).

This is why income timing dominates capital gains tax planning. A year with low ordinary income (early retirement, a sabbatical, a gap between jobs) is a year where the same sale can cost dramatically less.

The 0% Bracket: Free Tax Avoidance

The 0% bracket is real and generous. If your taxable income (ordinary income plus gains, after deductions) stays under the 0% threshold, your long-term gains and qualified dividends are tax-free at the federal level.

This is the engine behind two strategies worth knowing:

• Tax-gain harvesting — deliberately selling winners in a low-income year to reset your cost basis while paying 0%. It's the mirror image of tax-loss harvesting.
• Qualified dividend management — the dividends from index funds and most US stocks are "qualified" and taxed at the same 0%/15%/20% rates. In the 0% bracket, a portfolio's dividend yield is also tax-free.

The standard deduction sits underneath all of this. In 2026 it's $15,400 (single) and $30,800 (MFJ). A married couple with no other income can realize up to $99,300 in long-term gains plus shelter $30,800 more under the standard deduction — over $130,000 of income with zero federal tax.

How the 0% Threshold Has Moved

The single-filer 0% bracket top has climbed steadily with inflation:

The rate structure itself (0%/15%/20% plus NIIT) has been stable for two decades. The thresholds are what move — which is why an evergreen page with the current table matters more than a one-time explainer.

Net Investment Income Tax (NIIT)

Above $200,000 (single) or $250,000 (MFJ) in MAGI, a 3.8% surtax applies to the lesser of your net investment income or the amount by which your MAGI exceeds the threshold.

Net investment income includes interest, dividends, capital gains, rental income, and some passive business income — but not wages, Social Security, or retirement-account withdrawals. Wages can still trigger it indirectly: high salary plus realized gains can push you over the MAGI line.

Putting It Together

A quick mental checklist whenever you're about to sell an appreciated asset:

1. Held it more than a year? If not, the gain is ordinary income.
2. What's your taxable ordinary income? That determines where your gains start stacking.
3. How much 0% room is left? Subtract ordinary income from the 0% threshold for your filing status.
4. Will you cross the NIIT line? Add MAGI (wages + gains + investment income) and check the $200k/$250k threshold.
5. What does your state do? Most states tax gains as ordinary income, from 0% to 13%+. State tax can nearly double the bill.

Related Reading

• Capital Gains Tax: Short-Term vs. Long-Term — The holding-period rules and strategies behind these brackets
• Tax-Gain Harvesting — How to fill the 0% bracket in a low-income year
• Tax-Loss Harvesting — Offsetting realized gains with realized losses
• How Tax Brackets Actually Work — How ordinary income brackets differ from capital gains brackets
• Tax-Efficient Investing — Asset location to minimize capital gains over time