You finally sold that stock you’ve been holding since the pandemic. Or maybe you cashed out of a rental property that was more headache than profit. Now comes the part everyone dreads: the IRS wants a piece. Most people think "tax" and immediately assume they’re losing a flat chunk of their profit, but irs capital gains tax brackets actually work in your favor if you know how to play the game.
The weirdest part? You might literally pay $0.
No, that’s not a typo. Depending on your total income, the IRS might let you walk away with 100% of your profit. But if you’re a high earner, they’ll take 15% or 20%, plus a few "surprise" surtaxes.
The One Rule That Changes Everything
Before we look at the numbers, you’ve gotta know the difference between short-term and long-term. This is where most people mess up. If you hold an asset for 365 days or less, the IRS treats your profit like a regular paycheck. They tax it at your ordinary income rate, which can go as high as 37%.
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Hold it for 366 days? Suddenly you’re in the "long-term" club.
The rates for long-term gains are almost always lower than your regular tax bracket. For the 2025 and 2026 tax years, the thresholds have shifted upward to account for inflation, which basically means the government is giving you a slightly longer leash before they bump you into a higher bracket.
Breaking Down the 2026 Brackets
The IRS just released the figures for the 2026 tax year (the ones you’ll actually file in early 2027), and thanks to the One Big Beautiful Bill Act (OBBBA), things are a bit different than they used to be. The law made some of the old tax cuts permanent, but inflation is what really moved the needle on these specific thresholds.
If you are filing as a Single person in 2026:
- You pay 0% if your taxable income is $49,450 or less.
- You pay 15% if your income is between $49,451 and $545,500.
- You pay 20% if you make more than $545,500.
Married couples filing jointly get nearly double the room. For Married Filing Jointly in 2026:
- The 0% rate applies up to $98,900.
- The 15% rate covers you from $98,901 up to $613,700.
- Anything over $613,700 hits that 20% mark.
Why These Numbers Are Sneaky
Here is the thing about taxable income: it's not just your salary. It is your salary plus your capital gains minus your deductions.
Let’s say you’re single and earn $40,000 at your job. You also have a $10,000 capital gain from selling some Bitcoin. Your total income is $50,000. After you take the standard deduction (which is $16,100 for singles in 2026), your taxable income drops to $33,900. Because that $33,900 is below the $49,450 threshold, your entire $10,000 gain is taxed at 0%.
You basically got a $10,000 bonus from the market and the IRS didn't take a dime.
The "Surprise" Taxes You Didn't See Coming
Most people stop at the 20% bracket, but for high-income earners, there’s a "hidden" 23.8% rate. This comes from the Net Investment Income Tax (NIIT). It’s an extra 3.8% tax that kicks in if your Modified Adjusted Gross Income (MAGI) exceeds $200,000 for singles or $250,000 for married couples.
Then there are the "special" assets.
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The IRS doesn't treat everything the same. If you sell collectibles—think rare coins, art, or even certain NFTs—you don't get the 20% cap. Those are taxed at a maximum of 28%. Similarly, if you sell a business property and have to "recapture" depreciation, that’s taxed at 25%.
Real Estate and the $250k Loophole
If you're selling your primary home, the irs capital gains tax brackets might not even matter to you. Section 121 of the tax code says if you’ve lived in your house for at least two of the last five years, you can exclude up to $250,000 of profit (or $500,000 if you’re married) from being taxed at all.
You don't even have to report it. It’s just gone.
How to Lower Your Bill
Tax planning sounds like something only rich people do, but it’s actually pretty simple. One of the most common moves is Tax-Loss Harvesting. If you have a stock that’s "underwater" (worth less than you paid), you can sell it to realize a loss. That loss cancels out your gains.
If you have $10,000 in gains and $10,000 in losses, your net gain is $0. You pay nothing.
Another trick? Watch the calendar. Selling on day 364 is a disaster. Selling on day 367 is a win. That one-day difference could save you thousands.
The Crypto Factor
Starting in 2025, the IRS introduced Form 1099-DA. This means brokers and exchanges are now reporting your digital asset trades directly to the government. If you think you can hide your "moon bag" profits from the 2026 brackets, think again. The IRS is watching the blockchain more closely than ever.
Actionable Next Steps
To make sure you don't overpay, start with these moves:
- Check your holding periods: Use your brokerage’s "unrealized gains" tool to see which assets have been held for more than a year. Only sell those if you want the lower rates.
- Calculate your projected 2026 income: Include your salary and any bonuses. If you're close to a bracket edge (like the $49,450 mark for singles), you might want to wait until next year to sell.
- Max out your 401(k) or IRA: Lowering your taxable income through retirement contributions can actually pull your capital gains into a lower bracket.
- Track your basis: If you've made improvements to a home or paid commissions on stocks, add those to your "cost basis." A higher basis means a lower taxable profit.
Knowing how the irs capital gains tax brackets work isn't just about following rules; it's about keeping more of what you earned. The difference between 0% and 15% (or 20%) is huge over a lifetime of investing.