2026 Capital Gains Tax Rates: Federal Brackets + State by State

2026 LONG-TERM capital gains tax brackets (assets held >1 year: IRS Rev. Proc. 2025-32): SINGLE FILER: 0% on first $49,450. 15% on $49,451-$545,500. 20% above $545,500. MARRIED FILING JOINTLY: 0% on first $98,900. 15% on $98,901-$613,700. 20% above $613,700. MARRIED FILING SEPARATELY: 0% on first $49,450. 15% on $49,451-$306,850. 20% above $306,850. HEAD OF HOUSEHOLD: 0% on first $66,200. 15% on $66,201-$579,600. 20% above $579,600. PLUS NIIT (Net Investment Income Tax) 3.8%: applies to investment income (cap gains + dividends + interest + rental) when MAGI exceeds: $200,000 single / $250,000 MFJ / $125,000 MFS. NIIT is ON TOP of regular cap gains rate (so 18.8% or 23.8% effective). EXAMPLE: single filer with $400k income, $50k LT cap gain. Federal cap gains: 15% × $50k = $7,500. NIIT 3.8% × $50k = $1,900 (since income above $200k). Total federal: $9,400 (18.8% effective). Plus state. SHORT-TERM cap gains (assets held ≤1 year): taxed as ORDINARY INCOME at marginal bracket (10-37%). Plus state. Plus NIIT if applicable. SECTION 1250 UNRECAPTURED GAIN: 25% maximum federal rate (depreciated real estate). Plus state. SECTION 1202 QSBS EXCLUSION: 100% federal exclusion (up to $10M or 10x basis) for qualified small business stock held >5 years. State treatment varies; check the state DOR before assuming QSBS conformity.

State capital gains 2026 by state: CALIFORNIA: 12.3% top bracket (ordinary income treatment) + 1% mental health surcharge above $1M = 13.3% effective top. NEW YORK: 10.9% top state rate (ordinary income), and NYC residents can add 3.876% city tax. WASHINGTON: tiered capital gains excise tax: 7% on the first $1M of taxable Washington capital gains and 9.9% above $1M starting with tax year 2025. Washington has no wage income tax otherwise, and real estate sales are outside the Washington capital gains tax. TEXAS / FLORIDA / NEVADA / WYOMING / ALASKA / SOUTH DAKOTA / TENNESSEE: no broad state income tax on capital gains. NEW HAMPSHIRE: no state capital gains tax; the Interest & Dividends Tax was repealed for taxable periods beginning after Dec. 31, 2024. MASSACHUSETTS: 5% LT capital gains, with the 4% millionaire surtax above $1M income potentially applying. SOUTH CAROLINA: 44% state-level exclusion of net LT capital gains. WISCONSIN: 30% exclusion. NEW MEXICO: 40% of net LT capital gain excluded. ARKANSAS: 50% state-level exclusion. VERMONT: 40% exclusion. Recommendation: use this table as a routing map, then verify residence, sourcing, local taxes, and exclusions against the state DOR before filing or relocating.

LONG-TERM (LT) capital gains = profit from sale of asset held MORE than 1 year. Taxed at preferential rates: 0% / 15% / 20% federal + state varies. SHORT-TERM (ST) capital gains = profit from sale of asset held 1 YEAR OR LESS. Taxed at ORDINARY INCOME rates: 10% / 12% / 22% / 24% / 32% / 35% / 37% federal + state. EXAMPLE: $100,000 stock sale, $30,000 profit. HELD 13 MONTHS (LT): federal cap gains 15% × $30,000 = $4,500. HELD 11 MONTHS (ST): federal at 24% bracket = $7,200. DIFFERENCE: $2,700 just from holding 2 more months. HOLDING PERIOD CALCULATION: starts day AFTER you acquire the asset. So buy Jan 1, sell Jan 1 next year = 364 days held = SHORT-TERM. Sell Jan 2 = 365 days = LONG-TERM. CRITICAL DAY DIFFERENCE. INHERITED PROPERTY: automatically gets STEP-UP IN BASIS to fair market value at death. Holding period auto-LT regardless of when sold. GIFTED PROPERTY: takes donor's holding period + cost basis (carryover). MUTUAL FUND DISTRIBUTIONS: classified as LT or ST by fund: fund reports on 1099-DIV. RSU + STOCK OPTIONS: vesting/exercise establishes new holding period. Need 1+ year POST-VESTING for LT treatment. OFFSET RULES: LT losses first offset LT gains. ST losses first offset ST gains. Excess losses cross-class up to $3,000 ordinary income deduction/yr. Carry forward unused losses indefinitely. PRACTICAL: HOLD 366+ DAYS for cap gains optimization. Often saves 7-22 percentage points of tax.

PRIMARY RESIDENCE SALE 2026: Section 121 Home Sale Exclusion: SINGLE filer can exclude $250,000 of profit from federal capital gains. MARRIED FILING JOINTLY can exclude $500,000. ELIGIBILITY: (1) Owned the home 2+ of last 5 years. (2) Used as primary residence 2+ of last 5 years (can be different 2 years). (3) Haven't excluded another home sale in last 2 years. EXAMPLE: Bought $400k, sold $850k, profit $450k. Single: $250k exclusion. Taxable: $200k LT cap gain. Federal 15% × $200k = $30,000. Plus state. MFJ: $500k exclusion. Profit $450k = ZERO federal cap gains tax. EXCEEDING THE EXCLUSION (single sale of $1M+ home): only excess above exclusion is taxed. PARTIAL EXCLUSION (less than 2-year residency): pro-rated for "unforeseen circumstances": job change, health, divorce, military. EX: 12 months residency due to job relocation = 50% exclusion ($125k single, $250k MFJ). DEPRECIATION RECAPTURE: if you rented out part of the home or claimed home-office depreciation, that depreciation must be RECAPTURED at 25% federal Section 1250 rate. Typically applies if you converted home to rental in past. STATE CAP GAINS on home sale: most states follow federal exclusion. CA fully conforms ($250k/$500k excluded). NY conforms. WA cap gains 7% does NOT include primary residence sales. Some states have additional residency exclusions. STRATEGIC TIPS: (1) DOCUMENT improvements: capital improvements (kitchen remodel, addition) ADD to basis, reducing gain. Keep all receipts. (2) TIME SALES: if approaching $250k/$500k limit, consider home equity loan for needed cash vs sale. (3) MARRIED COUPLES: if one spouse died, surviving spouse can use $500k exclusion if sold within 2 years.

CRYPTO + NFT CAP GAINS 2026: Treated as PROPERTY by IRS (not currency). Regular cap gains rules apply. SHORT-TERM (held ≤1 year): ordinary income rates. LONG-TERM (held >1 year): 0%/15%/20% federal + state. TAXABLE EVENTS (not just selling): (1) Selling crypto for USD. (2) TRADING crypto for crypto (BTC for ETH = taxable event: sale of BTC + purchase of ETH). (3) Spending crypto on goods/services (treated as sale at FMV). (4) Receiving crypto as payment (ordinary income at FMV). (5) Mining/staking rewards (ordinary income at FMV when received + cap gains on subsequent sale). (6) NFT minting (purchase) + sale. (7) DeFi swaps (each token swap = taxable event). NOT TAXABLE: (1) Buying crypto with USD. (2) Holding (HODL). (3) Transferring between your own wallets. (4) Donating to qualified charity. (5) Gifting under the $19,000 annual exclusion for 2026. RECORD-KEEPING REQUIREMENTS: cost basis + FMV at each transaction. CoinTracker, Koinly, ZenLedger automate this from exchange APIs. WASH SALE RULE: does NOT currently apply to crypto (unlike stocks). Sell BTC at loss + immediately rebuy = realize loss for tax purposes. BUT 2026 legislation pending may extend wash sale rule to crypto. NEW IRS REPORTING 2026: Form 1099-DA (Digital Asset) issued by centralized exchanges to IRS for sales. Coinbase + Kraken + Gemini + Binance.US must report. DeFi/decentralized still self-report. NFT SPECIFIC: NFTs may qualify as "collectibles": 28% maximum LT cap gains rate (HIGHER than 20% standard). Pending IRS guidance on which NFTs are collectibles. STATE: same rules as cap gains generally. CA/NY full state cap gains. TX/FL/NV zero. STRATEGIC: TAX-LOSS HARVESTING: sell losers Dec to offset gains. Crypto-specific advantage: no wash sale rule (currently).

Capital gains tax reduction 2026 strategies: (1) HOLD LONG-TERM: minimum 1 year + 1 day for preferential rates. Saves 7-22 percentage points. (2) TAX-LOSS HARVESTING: sell losers in same year to offset gains dollar-for-dollar. Up to $3,000 excess offsets ordinary income. Carry forward unused losses indefinitely. (3) STEP-UP IN BASIS: heirs may receive stepped-up basis to fair market value at death, reducing accumulated capital gains. (4) QUALIFIED OPPORTUNITY FUNDS / QOZ: eligible gains can generally be deferred only until an inclusion event or Dec. 31, 2026, whichever is earlier. The original 10% and 15% basis step-ups are not a fresh 2026 benefit for new investments because deferred gain is recognized by Dec. 31, 2026. The 10-year exclusion for appreciation in a qualified fund can still matter. Verify current eligibility with IRS guidance and a tax professional before relying on QOZ planning. (5) 1031 EXCHANGE (real estate only): defer gain by reinvesting in like-kind property under strict 45-day identification and 180-day closing rules. (6) DAF (Donor-Advised Fund): donate appreciated stock instead of cash, deduct eligible fair market value, and avoid tax on the donated appreciation. (7) SECTION 1202 QSBS: qualified small business stock held 5+ years can qualify for a federal exclusion up to $10M or 10x basis; state treatment varies. (8) CHARITABLE REMAINDER TRUST (CRT): complex high-net-worth structure for appreciated assets and charitable remainder planning. (9) ROTH IRA / 401(k): sales inside tax-advantaged accounts do not create current taxable capital gains. (10) RESIDENCE CHANGE: high-gain sellers may compare no-broad-income-tax states such as TX, FL, NV, SD, AK, WY, and TN, but Washington needs a separate capital-gains-excise-tax caveat. (11) INSTALLMENT SALE: spread gain over multiple years if the transaction qualifies. (12) TAX-EFFICIENT ASSET LOCATION: municipal bonds, Treasury bills, index funds, and tax-managed funds can have different federal and state treatment. For large gains, use a CPA or tax attorney before executing the sale.

NIIT (Net Investment Income Tax) = 3.8% additional federal tax on INVESTMENT INCOME (cap gains, dividends, interest, rental net income, passive royalties). Enacted 2013, NOT inflation-indexed. THRESHOLDS (2026: same as 2013): SINGLE / HoH: applies when MAGI exceeds $200,000. MFJ: $250,000. MFS: $125,000. APPLIES TO: lesser of (a) net investment income OR (b) MAGI minus threshold. EXAMPLE: Single, $250k MAGI, $80k LT cap gain. MAGI > $200k threshold by $50k. Net investment income $80k. NIIT = 3.8% × LESSER ($50k) = $1,900. EXAMPLE 2: Single, $400k MAGI, $80k LT cap gain. MAGI > $200k by $200k. Net investment income $80k. NIIT = 3.8% × LESSER ($80k) = $3,040. EXEMPTIONS: (1) Wages and self-employment earned income: NOT subject to NIIT (already FICA-taxed). (2) Distributions from qualified retirement plans (401k, IRA, pension). (3) Tax-exempt interest (municipal bonds). (4) Active business income. (5) Section 121 home sale exclusion. (6) Operating S-corp K-1 income (active). HIGH-EARNERS COMMON SITUATION: NIIT effectively raises top federal LT cap gains rate from 20% to 23.8%. PLUS state. CA top: 23.8% federal + 14.4% CA = 38.2% combined. NY top: 23.8% + 10.9% NY = 34.7%. NYC adds 3.876% = 38.6%. PLANNING: (1) Manage MAGI: defer income to stay below threshold. (2) Use municipal bonds (tax-exempt = no NIIT). (3) Roth conversions: take advantage of 0/15% LT cap gains in low-income years. (4) Married filing jointly $250k threshold: couples in 12-22% bracket NOT yet hit by NIIT. NEXT 5 YEARS: NIIT thresholds remain frozen. As inflation rises, more taxpayers will hit threshold.

Capital gains tax PAYMENT TIMING 2026: ANNUAL: most taxpayers report cap gains on Schedule D + Form 8949 with annual tax return (April 15). Pay any owed at filing. QUARTERLY ESTIMATED TAX REQUIREMENT: if you OWE $1,000+ at filing year-over-year (after withholding + credits), you must pay quarterly estimates OR get hit with UNDERPAYMENT PENALTY. ESTIMATED TAX DUE DATES 2026: Q1 (Jan-Mar gains): April 15. Q2 (Apr-May gains): June 15 (only 2 months: odd). Q3 (Jun-Aug): Sept 15. Q4 (Sep-Dec): Jan 15 of next year. SAFE HARBOR (avoid penalty): pay through withholding + estimates the LESSER of: (a) 90% of CURRENT year tax owed, OR (b) 100% of PRIOR year tax (110% if prior AGI >$150k). PRACTICAL: if you have $50k LT cap gain in February, owe ~$10k federal tax. Without estimates, $10k is paid April next year + small penalty. With Q1 estimate, pay $10k by April 15. WHO MUST PAY ESTIMATES: (1) Self-employed without sufficient withholding. (2) Investors with significant cap gains/dividends. (3) Retirees taking IRA withdrawals without sufficient withholding. (4) Anyone with $1k+ tax owed at filing year-over-year. PENALTY: ~5-8% annualized rate on underpayment (varies quarterly). Penalty calculator on IRS form 2210. PAY VIA: IRS Direct Pay (free), EFTPS (free), card (fee), check (mail). FORM 1040-ES quarterly. STATE: also requires estimates if >$1k owed. Check your state DOR rules. TAX-LOSS HARVESTING TIMING: Q4 each year, review portfolio for losers. Sell to offset Q1-Q3 gains and reduce Q4 estimated payment. AUTOMATIC HARVESTING: Wealthfront, Betterment, Schwab Intelligent Portfolios offer automated tax-loss harvesting on taxable accounts.