Capital Gains Tax on Stocks for 2026, With the Math Worked Out

For stock you sell in 2026, the federal tax on the profit comes down to one date and one number. Shares held more than a year are taxed at 0%, 15% or 20%, and a single filer pays 0% on long-term gains as long as taxable income stays at or under $49,450 ($98,900 for a married couple filing jointly). Shares held a year or less are taxed like your paycheck, at 10% to 37%.

Those 2026 thresholds come from Revenue Procedure 2025-32, the IRS document that sets each year’s inflation adjustments, and they apply to the return you’ll file in early 2027. If you check them yourself, be aware that as of October 2026 the IRS page most people land on, Topic No. 409, still showed the 2025 figures ($48,350 for single filers). The rules on that page haven’t changed, only the dollar amounts.

How the gain is measured

You’re taxed on the profit, never on the whole sale. Pay $5,000 for 100 shares, sell them for $8,500, and the gain is $3,500. Your cost basis is what you paid plus any purchase commission, and sale fees come off the proceeds. Your broker tracks this and reports it to the IRS on Form 1099-B.

Nothing is owed while you just hold. A position that has tripled on paper costs you zero until you sell it. After a sale, reinvesting the cash the same afternoon doesn’t change anything. The gain is taxable for that year whether the money sits in cash or goes straight into another stock.

The one-year line

Long-term treatment requires holding the shares more than one year. IRS Publication 550 says to start counting on the day after you bought. So shares bought on January 15, 2025 and sold on January 15, 2026 have been held exactly one year, which is still short-term. Sell on January 16, 2026 or later and the gain is long-term.

Watch for odd lots. Every dividend reinvestment buys a new lot with its own purchase date, so an old position can hold a few short-term shares. And if a wash sale moved a disallowed loss onto replacement shares, those shares inherit the holding period of the ones you sold, which can make them long-term sooner than the calendar suggests.

2026 long-term capital gains rates by filing status

The brackets are based on your total taxable income, meaning wages, interest, business income and the gain itself, after the standard deduction. For 2026 that deduction is $16,100 for single filers, $32,200 for joint filers and $24,150 for heads of household, per the IRS 2026 adjustments release.

For comparison, the 2025 joint-filer 0% ceiling was $96,700, so the line moved up $2,200. The three rates themselves didn’t change. A few special assets carry higher long-term rates under Topic 409, such as 28% on collectibles, but ordinary stocks and ETFs use the table above.

Short-term gains use the regular brackets

A gain on shares held a year or less is added to your other income and taxed at your ordinary rate. These are the 2026 brackets for the two most common filing statuses.

A worked return: $55,000 in wages and a $20,000 gain

A single filer with $55,000 of wages in 2026 takes the standard deduction, which leaves taxable wage income of $55,000 minus $16,100, or $38,900. During the year they sell shares owned for three years at a $20,000 profit.

Long-term gains sit on top of your other income. The wages already fill the first $38,900, so the gain starts there. The 0% band runs to $49,450, which leaves $10,550 of room. That slice of the gain is taxed at nothing. The other $9,450 lands in the 15% band, and 15% of $9,450 is $1,417.50. So the federal tax on a $20,000 gain comes to $1,417.50, an effective rate of about 7%.

If the shares had been held only ten months, the same $20,000 would be ordinary income. From $38,900 up to $50,400 is $11,500 taxed at 12%, which is $1,380. The remaining $8,500 falls in the 22% bracket, which is $1,870. Together that’s $3,250. Holding past the one-year mark is worth $1,832.50 in this case.

Notice the gain never pushes your wages into a higher rate. Wages are taxed the same either way; only the gain’s own rate moves. What a gain does change is your adjusted gross income, and that number feeds other things, like the premium tax credit on a marketplace health plan or how much of a Social Security check is taxable. A gain taxed at 0% still counts there.

The extra 3.8% above $200,000

Higher earners also owe the Net Investment Income Tax, a 3.8% tax figured on Form 8960. It kicks in when modified AGI passes $200,000 for single filers and heads of household, $250,000 for joint filers, or $125,000 for married filing separately. The IRS says plainly that these amounts are not indexed for inflation, so they catch more people every year.

The tax applies to the smaller of two numbers: your net investment income, or how far your MAGI is over the line. A married couple with $210,000 of wages and a $50,000 long-term gain has MAGI of $260,000. They’re $10,000 over, and $10,000 is smaller than $50,000, so the NIIT is 3.8% of $10,000, or $380. At the very top, long-term gains cost 23.8% federal (20% plus 3.8%) and short-term gains cost 40.8%.

How losses net against gains

Losses are sorted before they’re used. Short-term losses go against short-term gains first, long-term against long-term, and whatever is left on either side then crosses over. If you end the year with a net loss, up to $3,000 of it ($1,500 if married filing separately) comes off your other income, and the rest carries forward with no expiration date.

That leaves a $5,000 net short-term gain and a $7,000 net long-term gain. For someone in the 22% bracket, that’s $1,100 plus $1,050, or $2,150. Without the two losing sales the bill would have been $8,000 at 22% ($1,760) plus $12,000 at 15% ($1,800), or $3,560. The losses saved $1,410. Selling losers on purpose for this reason is called tax-loss harvesting, and the wash-sale rule limits it. Both are covered in the post on legal ways to cut tax on stock gains.

Which shares did you sell?

If you bought the same stock more than once, the lot you sell sets the gain. When you don’t identify shares, Publication 550 treats the ones you bought first as the ones sold. That’s FIFO, and on a stock that has climbed for years it usually produces the biggest gain.

Take 100 shares bought at $20 and another 100 bought later at $45, with the stock now at $60. Selling 100 shares under FIFO gives a $4,000 gain ($6,000 minus $2,000). Naming the $45 lot instead gives $1,500. At 15%, that’s $600 versus $225. Most brokers let you pick the lot in the order screen or set a default method in account settings, but the choice has to be made at the time of the sale.

Dividends, inherited shares and gifts

Qualified dividends get the same 0%, 15% and 20% rates as long-term gains. To qualify you have to hold the shares more than 60 days during the 121-day window that starts 60 days before the ex-dividend date. A $10,000 qualified dividend costs $1,500 at 15%, against $2,200 if it were taxed as ordinary income at 22%. REIT payouts and dividends on shares you didn’t hold long enough are taxed as ordinary income.

Inherited stock gets a new basis equal to its fair market value on the date of death, according to the IRS FAQ on inheritances. If your father paid $5,000 for shares worth $200,000 when he died and you sell at $200,000, your gain is zero. Stock received as a gift from a living person works the other way: you generally keep the giver’s original basis, so selling $50,000 of gifted stock that cost $10,000 leaves you with a $40,000 gain.

Do you need to pay estimated tax after a big sale?

Possibly. The IRS expects estimated payments if you’ll owe $1,000 or more when you file. You’re generally safe from the penalty if withholding and payments cover 90% of this year’s tax or 100% of last year’s, whichever is smaller (higher earners face a stricter version, explained in Publication 505). Payment periods end March 31, May 31, August 31 and December 31, with due dates of April 15, June 15, September 15 and January 15 of the next year.

The IRS page mentions the fix for this only in passing. If your big sale happens in November, you don’t have to pretend the income arrived evenly all year. The annualized income method on Form 2210 lets you show that the gain came late, which can wipe out a penalty for the earlier quarters. A December sale can be covered by the January 15, 2027 payment.

Sales inside a traditional IRA, 401(k) or Roth IRA aren’t taxed when they happen at all. Withdrawals from traditional accounts are taxed later as ordinary income, and qualified Roth withdrawals aren’t taxed. How brokers report your taxable trades, and what happens when a sale is missing from your return, is in the post on trading apps and the IRS.

Before you sell

• Open the lot detail for the position and check each purchase date against the one-year line.
• Estimate your 2026 taxable income without the sale, then see how much room is left under $49,450 (single) or $98,900 (joint).
• Pick the lot before you place the order if you own shares bought at different prices.
• If the gain is large, set the tax aside and make an estimated payment for that quarter.
• Keep the 1099-B that arrives early next year; the sales go on Form 8949 and Schedule D.

Related reading

• Legal ways to reduce taxes on stock gains
• Do trading apps report your trades to the IRS?
• Can you contribute to a Roth IRA and a 401(k) in the same year?

The 2026 brackets and ceilings above come from Rev. Proc. 2025-32 and cover federal tax only. Your state may tax the same gain as regular income, so check its revenue department’s rules and match every sale to your 1099-B before you file.