If you sell stocks, real estate, cryptocurrency, or collectibles for a profit, you owe capital gains tax on the profit. But the rate you pay depends on a surprisingly large number of factors — how long you held the asset, your total income, which state you live in, and what type of asset you sold.
Use our Capital Gains Tax Calculator to estimate your exact tax bill.
Short-Term vs Long-Term: The Most Important Distinction
When you sell an asset, the first thing the IRS checks is how long you held it:
- Short-term (≤ 1 year): Taxed as ordinary income at your marginal tax bracket — up to 37% in 2026.
- Long-term (> 1 year): Taxed at preferential rates — 0%, 15%, or 20% depending on your income.
The difference is enormous. A high-income earner in the 35% bracket who sells a stock after 11 months pays 35% on the gain. If they wait one more month, the rate drops to 20% — a 15-percentage-point swing.
2026 Long-Term Capital Gains Tax Brackets
For 2026, the LTCG brackets are adjusted for inflation per IRS Revenue Procedure 2025-32:
| Tax Rate | Single Filers | Married Filing Jointly | Head of Household |
|---|---|---|---|
| 0% | $0 – $48,350 | $0 – $96,700 | $0 – $64,750 |
| 15% | $48,351 – $533,400 | $96,701 – $600,050 | $64,751 – $566,700 |
| 20% | Over $533,400 | Over $600,050 | Over $566,700 |
Note: These brackets apply to your total taxable income including capital gains. So if you're single with $40,000 in ordinary income and sell stock for a $20,000 long-term gain, your total income is $60,000 — part of the gain ($8,350) is taxed at 0%, and the rest ($11,650) at 15%.
The NIIT Surtax: An Extra 3.8%
If your modified adjusted gross income (MAGI) exceeds $200,000 (single) or $250,000 (married filing jointly), you also pay the Net Investment Income Tax (NIIT) of 3.8% on the lesser of your net investment income or the excess over the threshold. See the IRS NIIT page for official details.
This means your effective top LTCG rate can reach 23.8% (20% + 3.8%) — or even higher with state taxes.
State Capital Gains Taxes
Your state tax treatment of capital gains matters a lot. Some states treat gains as ordinary income, others have flat rates, and a few tax nothing at all:
| State Type | Examples | Impact on $50k Gain |
|---|---|---|
| No income tax | TX, FL, NV, WA, SD, WY | $0 state tax |
| Flat rate | CO (4.4%), IL (4.95%), UT (4.65%) | $2,200–$2,475 |
| Progressive (high) | CA (up to 13.3%), NY (up to 10.9%), NJ (up to 10.75%) | $5,000–$6,650 |
If you live in California, a $50,000 long-term gain could cost you $10,000 in federal LTCG tax (20%) + $1,900 NIIT + $6,650 state tax = $18,550 total — an effective rate of 37%.
Special Asset Types
Real Estate
When you sell a rental property, the IRS recaptures depreciation you claimed at a flat 25% rate (for the depreciation portion of the gain). Any remaining gain above the original cost basis is taxed at your regular LTCG rate (0/15/20%). This is called Section 1250 recapture.
For your primary residence, you can exclude up to $250,000 of gain ($500,000 for married couples) if you've lived there 2 of the last 5 years.
Collectibles
Art, antiques, rare coins, wine, and other collectibles are taxed at a flat 28% maximum rate (not the standard 20% top LTCG rate). Plus NIIT and state tax on top.
Cryptocurrency
The IRS treats crypto as property. Every trade, sale, or spend is a taxable event. Same holding period rules apply: <1 year = short-term, >1 year = long-term. Wash sale rules do not apply to crypto (for now — the IRS has proposed rules but they're not yet final).
Real-World Examples
Example 1: Stock Sale (Middle Income)
Jane, single, earns $75,000/year. She sells Apple stock she held for 3 years, realizing a $15,000 gain. Her total income is $90,000. She pays 0% LTCG on the portion of the gain up to $48,350 and 15% on the rest. Total federal tax: ~$1,250. No NIIT. If she lives in Texas, zero state tax.
Example 2: Rental Property Sale
Mike, married, earns $200,000. He sells a rental property for a $200,000 gain, of which $80,000 is depreciation recapture. The recapture portion is taxed at 25% ($20,000). The remaining $120,000 is taxed at 15% LTCG ($18,000). NIIT applies on the $200,000 gain since MAGI exceeds $250,000. Total: $20,000 + $18,000 + $7,600 NIIT = $45,600.
Tax-Loss Harvesting: The Smart Investor's Strategy
You can offset capital gains by selling losing investments in the same tax year. This is called tax-loss harvesting:
- Short-term losses offset short-term gains first, then long-term gains
- Long-term losses offset long-term gains first, then short-term gains
- If total losses exceed gains, you can deduct up to $3,000 against ordinary income ($1,500 if married filing separately)
- Excess losses carry forward indefinitely
Calculate Your Capital Gains Tax
Use our Capital Gains Tax Calculator — enter your asset details, income, and state to see your exact federal LTCG, NIIT, and state tax bill. Also check our Income Tax Calculator for your overall tax picture.