When you sell an investment for more than you paid, the profit is called a capital gain — and the IRS wants its share. But how much you pay depends heavily on how long you held the investment.
Short-Term vs Long-Term Capital Gains
Short-term gains (held 1 year or less) are taxed as ordinary income at your marginal tax rate (10-37%). Long-term gains (held more than 1 year) receive preferential rates of 0%, 15%, or 20%.
2026 Long-Term Capital Gains Rates
- 0%: Taxable income up to $48,350 (single) / $96,700 (married)
- 15%: Income from $48,350 to $533,400 (single) / $96,700 to $600,050 (married)
- 20%: Income above $533,400 (single) / $600,050 (married)
Plus the 3.8% Net Investment Income Tax (NIIT) for higher earners.
Tax-Saving Strategies
- Hold investments for 12+ months to qualify for long-term rates
- Tax-loss harvesting: Sell losers to offset gains
- Use tax-advantaged accounts: No capital gains in 401k/IRA/Roth IRA
- Time your sales: Sell in years when your income is lower
Calculate your estimated capital gains tax with our capital gains calculator.