When you sell an investment for more than you paid, the profit is a capital gain. How much tax you owe on it depends on two things: how long you held the asset and how much other income you have. A little planning around both can make a real difference.
This guide covers the rules for tax year 2026, the return you'll file in early 2027.
Short-term vs long-term
The holding period is the dividing line:
- Short-term: you held the asset one year or less. The gain is taxed at your ordinary income tax rates, the same as wages.
- Long-term: you held it more than one year. The gain qualifies for lower rates of 0%, 15% or 20%.
Say you buy shares for $10,000 and sell them for $15,000. If you sell after 11 months, the $5,000 gain is taxed at your regular rate. Wait until you've held them for more than a year, and the same $5,000 may be taxed at 15%, or even 0%.
A few kinds of long-term gain have their own maximum rates. Gains on collectibles such as coins and art can be taxed at up to 28%, and the portion of a real estate gain that reflects past depreciation (unrecaptured section 1250 gain) can be taxed at up to 25%.
2026 long-term capital gains thresholds
The rate on long-term gains depends on your total taxable income, including the gains. These are the 2026 thresholds from IRS Revenue Procedure 2025-32:
| Filing status (2026) | 0% rate up to | 15% rate up to | 20% rate above |
|---|---|---|---|
| Single | $49,450 | $545,500 | $545,500 |
| Married filing jointly | $98,900 | $613,700 | $613,700 |
| Head of household | $66,200 | $579,600 | $579,600 |
| Married filing separately | $49,450 | $306,850 | $306,850 |
These are taxable income figures, meaning income after deductions. A married couple with $90,000 of taxable income in 2026, some of it long-term gains, could pay 0% on those gains. The gains stack on top of ordinary income, so only the part that falls under the threshold gets the 0% rate.
The 3.8% net investment income tax
Higher earners may owe an extra 3.8% net investment income tax (NIIT) on top of the regular capital gains rate. It applies to the smaller of your net investment income or the amount your modified adjusted gross income exceeds:
- $250,000 for married filing jointly or a qualifying surviving spouse
- $200,000 for single or head of household
- $125,000 for married filing separately
Net investment income includes capital gains, dividends, interest, and most rental income. It doesn't include wages or income from a business you actively run. These thresholds are set in the law and are not adjusted for inflation, so more people cross them over time.
Tax-loss harvesting and the $3,000 limit
Losses can work in your favor. Capital losses first offset capital gains. If your losses are larger than your gains, you can deduct up to $3,000 of the net loss against other income each year ($1,500 if married filing separately). Any loss beyond that carries forward to future years.
That's the idea behind tax-loss harvesting: selling investments that are down to realize losses that offset gains you've already taken. Say you sold one stock in 2026 for a $12,000 gain and you hold another that's down $8,000. Selling the losing position before year-end would cut your taxable gain to $4,000.
Watch out for the wash sale rule
You can't sell an investment at a loss just to buy it right back. Under the wash sale rule, a loss on stock or securities is disallowed if, within 30 days before or after the sale, you buy substantially identical stock or securities. That includes buying them in your IRA or Roth IRA.
The loss isn't gone forever. It's added to the basis of the new shares, which postpones the deduction until you sell those. But it won't help you this year. If you want to stay invested, one common approach is to buy something similar but not substantially identical, or to wait more than 30 days before buying back.
Selling your home: the $250,000/$500,000 exclusion
Your home gets special treatment. If you sell your main home, you can exclude up to $250,000 of gain from income, or up to $500,000 if you file a joint return. To qualify, you generally must have owned the home and lived in it as your main home for at least two of the five years before the sale. You also can't have used the exclusion on another home sale in the two years before.
Gain above the exclusion is taxable, and you must report the sale if you get a Form 1099-S or can't exclude all of the gain. For more on property, see our article on real estate tax benefits.
Practical steps for 2026
- Check the purchase dates on positions you plan to sell. A few extra weeks could make a gain long-term.
- Estimate your 2026 taxable income to see whether you're near the 0% or 20% threshold.
- Review unrealized losses before December and harvest them if it makes sense.
- Keep track of reinvested dividends, since they add to your basis.
- If you hold crypto, read our guide to crypto tax reporting and Form 1099-DA.
More year-end ideas are in our year-end tax planning checklist.
When to get professional help
Simple sales from one brokerage account are usually straightforward. It's worth talking to a professional if you're selling a business interest, rental property or concentrated stock position, if you're close to the NIIT or 20% thresholds, or if you have loss carryforwards and wash sales to sort out. Our personal tax preparation team can help you plan sales and report them correctly. You can book an appointment any time.
This article is general information, not tax advice for your situation.
Sources
- IRS: Rev. Proc. 2025-32 (2026 inflation adjustments)
- IRS: Topic no. 409, Capital gains and losses
- IRS: Topic no. 559, Net investment income tax
- IRS: Questions and answers on the net investment income tax
- IRS: Publication 550, Investment Income and Expenses (wash sales)
- IRS: Topic no. 701, Sale of your home
General information, not tax advice. Tax rules change and depend on your situation. Figures are for tax year 2026 unless noted; confirm current amounts at IRS.gov or talk to a Stellar Tax professional before acting.