The Complete US Capital Gains Tax Guide (2026): Rates, Holding Periods & State Differences
Capital gains tax applies when you sell an asset for more than you paid — stocks, crypto, real estate, a business, even collectibles. The rate you pay depends on one critical factor: how long you held the asset. In 2026, long-term gains enjoy preferential federal rates of 0%, 15%, or 20%, while short-term gains are taxed as ordinary income at up to 37%. This guide explains the 2026 rates, the holding-period rule, the 3.8% surtax, how states differ, and the legal ways to reduce what you owe.
Short-Term vs Long-Term Capital Gains
The dividing line is one year (365 days).
- Long-term: held more than one year → preferential federal rates (0% / 15% / 20%) plus possible 3.8% NIIT.
- Short-term: held one year or less → taxed at ordinary income rates (the same brackets as wages, up to 37%) plus possible 3.8% NIIT.
That gap is enormous: the same dollar of gain can be taxed at 20% or 37% depending on holding period — a 17-point swing. For most concentrated positions, waiting one extra day past the one-year mark is worth it unless you have a fundamental reason to sell now.
2026 Long-Term Capital Gains Rates
Long-term rates depend on your taxable income and filing status:
- 0%: up to $48,350 (single) / $96,700 (married filing jointly)
- 15%: $48,351 – $533,400 (single) / $96,701 – $600,050 (married filing jointly)
- 20%: above those thresholds
Special asset caps still apply: collectibles top out at 28%, unrecaptured Section 1250 real estate gain at 25%, and qualified small business stock (QSBS) under Section 1202 can be taxed at 0%.
The 3.8% NIIT and Your Top Rate
High earners owe an extra 3.8% Net Investment Income Tax on the lesser of net investment income or MAGI above $200,000 (single) / $250,000 (married filing jointly). Layer it on and the all-in federal rates become:
- Long-term top: 23.8% (20% + 3.8%)
- Short-term top: 40.8% (37% + 3.8%)
Model your scenario with our federal bracket calculator and income tax calculator.
How States Tax Capital Gains in 2026
Most states tax capital gains as ordinary income at their regular rates — so California (13.3%) and New York (10.9%) are the harshest. But the map is varied:
- Nine states have no state-level capital gains tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Washington levies a 7% tax on long-term gains above a threshold, so it is zero below that line.
- Washington specifically charges 7% on long-term gains over ~$262,000 (9% above $1,000,000) — see our Washington state guide.
- A few states (e.g., Arizona) give partial preferential rates.
See every state in our US state tax comparison table, and review our crypto tax guide if digital assets are involved.
How to Calculate and Reduce Capital Gains Tax
1. Always aim for long-term treatment
Holding just past the one-year mark can cut the federal rate from 37% to 20% (or 23.8% with NIIT).
2. Harvest losses
Realize losses in the same year to offset gains dollar-for-dollar. A $20,000 loss can save up to 29% at top rates.
3. Plan around the 0% bracket
In a low-income year (sabbatical, retirement gap, between jobs), realize gains in the 0% federal bracket — you may owe nothing federally.
4. Use QSBS and charitable giving
Qualified small business stock can be federal-tax-free under Section 1202. Donating appreciated stock directly to charity avoids the gain entirely while generating a full-value deduction.
5. Consider a tax-free residency
Living in a no-capital-gains-tax state permanently removes the state layer. Our tax-free state guide covers the trade-offs.
Run the numbers with our state tax burden calculator and after-tax calculator.
50-State Capital Gains Directory
Browse the full guide for any state:
Alabama · Alaska · Arizona · Arkansas · California · Colorado · Connecticut · Delaware · Florida · Georgia · Hawaii · Idaho · Illinois · Indiana · Iowa · Kansas · Kentucky · Louisiana · Maine · Maryland · Massachusetts · Michigan · Minnesota · Mississippi · Missouri · Montana · Nebraska · Nevada · New Hampshire · New Jersey · New Mexico · New York · North Carolina · North Dakota · Ohio · Oklahoma · Oregon · Pennsylvania · Rhode Island · South Carolina · South Dakota · Tennessee · Texas · Utah · Vermont · Virginia · Washington · West Virginia · Wisconsin · Wyoming
Summary
Capital gains tax in 2026 rewards patience: hold over a year and you pay 0/15/20% federally instead of up to 37%. Add the 3.8% NIIT for high earners and the state layer — from zero in nine states to 13.3% in California — and the total can swing from 0% to over 40%. The levers are the same for every investor: length of holding, loss harvesting, bracket timing, and residency. Start with our federal bracket calculator and explore the 50-state directory above.
Our content is produced by a dedicated research team that compiles guidance from primary sources — including the Internal Revenue Service (IRS), state revenue departments, and official .gov publications. We review every article at least once per year, and immediately whenever federal or state tax law changes, to keep rates and rules current. SaveTaxUS is an independent educational resource and is not affiliated with any government agency.
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FAQ
Q: What is the difference between short-term and long-term capital gains?
A: The line is one year (365 days). Assets held more than a year get long-term preferential rates (0%/15%/20%); assets held a year or less are taxed as ordinary income at up to 37%. Waiting one extra day past the anniversary can cut the federal rate by 17 points.
Q: What are the 2026 long-term capital gains rates?
A: For 2026, long-term gains are taxed at 0% up to $48,350 (single) / $96,700 (joint), 15% in the middle, and 20% above those thresholds. Collectibles cap at 28% and unrecaptured Section 1250 real estate gain at 25%.
Q: What is the 3.8% NIIT?
A: The Net Investment Income Tax is a 3.8% federal surtax on the lesser of net investment income or MAGI above $200,000 (single) / $250,000 (joint). It pushes the all-in long-term top rate to 23.8% and the short-term top to 40.8%.
Q: Which states have no capital gains tax?
A: Nine states have no state-level capital gains tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington (below its gain threshold), and Wyoming. California and New York tax gains as ordinary income at 13.3% and 10.9%.
Q: How can I legally reduce capital gains tax?
A: Hold over a year for long-term rates, harvest losses to offset gains, realize gains in a low-income 0% bracket year, use QSBS treatment, donate appreciated stock to charity, and consider residency in a no-capital-gains-tax state.
Q: Does Washington really tax capital gains?
A: Yes. Washington has no general income tax but levies a 7% tax on long-term capital gains above roughly $262,000 (9% above $1,000,000), with the threshold inflation-adjusted each year.