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 $48,350. 15% on $48,351-$533,400. 20% above $533,400. MARRIED FILING JOINTLY: 0% on first $96,700. 15% on $96,701-$600,050. 20% above $600,050. MARRIED FILING SEPARATELY: 0% on first $48,350. 15% on $48,351-$300,025. 20% above $300,025. HEAD OF HOUSEHOLD: 0% on first $64,750. 15% on $64,751-$566,700. 20% above $566,700. 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. Some states conform (TX/NV/WA), some don't (CA/PA).

State capital gains 2026 by state: CALIFORNIA — 13.3% top rate (ordinary income treatment) + 1% mental health surcharge above $1M = 14.4% effective top. HIGHEST in US. Single $50k LT cap gain: federal 15% + CA up to 13.3% = up to 28.3% combined. Plus 3.8% NIIT if income >$200k = 32.1%. NEW YORK — 10.9% top state rate (ordinary income). NYC residents add 3.876% city tax. Combined federal + NY + NYC: up to 38.5% on LT cap gains for high earners. Plus NIIT. WASHINGTON — unique. 7% on LONG-TERM cap gains above $262,000/yr (per filer). NO income tax otherwise. Charitable donations + sales of primary residence excluded. 2024 law (RCW 82.87) survived state Supreme Court challenge. TEXAS / FLORIDA / NEVADA / WYOMING / ALASKA / SD / TN — ZERO state cap gains tax. NEW HAMPSHIRE — 0% on cap gains (only taxes interest + dividends, ending 2027). MASSACHUSETTS — 5% LT cap gains (preferential vs ordinary 8.5%). Plus 4% surcharge above $1M income = 9% effective for millionaires. SOUTH CAROLINA — 44% state-level exclusion of net LT cap gains. Effective ~3.6% top. WISCONSIN — 30% exclusion. Effective ~5.36% top. NEW MEXICO — 40% of net LT cap gain excluded. Effective ~3.5%. ARKANSAS — 50% state-level exclusion. Effective ~2.2%. VERMONT — 40% exclusion. Effective ~5.25%. RECOMMENDATION 2026: states with cap gains exclusions (SC/WI/NM/AR/VT) provide meaningful relief. Zero-tax states best for >$1M LT cap gains. CA/NY/NJ punish high gains hardest.

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 <$18k (annual exclusion 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 $-for-$. Up to $3,000 excess offsets ordinary income. Carry forward indefinitely. Implement Q4 each year. (3) STEP-UP IN BASIS — hold appreciated assets until death (or longer). Heirs receive stepped-up basis to FMV at death, eliminating accumulated cap gains. (4) QUALIFIED OPPORTUNITY ZONES (QOZ) — invest cap gains in QOZ Fund within 180 days. Defer federal cap gains tax until 2026 (final program year). 10% basis bump if held 5+ yrs, 15% bump 7+ yrs. AFTER 10 YRS: no tax on QOZ-held gain. (5) 1031 EXCHANGE (real estate only) — defer gain by reinvesting in like-kind property. STRICT 45-day identification + 180-day close rules. Real estate-to-real-estate only post-2018. (6) DAF (Donor-Advised Fund) — donate appreciated stock instead of cash. Deduct full FMV. AVOID cap gains on appreciation. Distribute to charity over years. (7) SECTION 1202 QSBS — qualified small business stock (C-corp <$50M assets at issuance), held 5+ years = 100% federal exclusion (up to $10M or 10x basis). Common for startup employees + founders. (8) CHARITABLE REMAINDER TRUST (CRT) — sell appreciated asset in CRT structure tax-free; receive income stream; remainder to charity. Complex, high-net-worth tool. (9) ROTH IRA / 401(k) — sell appreciated assets within retirement account. No cap gains tax. (10) RESIDENCE CHANGE — high-cap-gains years, time relocation to no-tax state (TX/FL/NV/WA/SD/AK/WY) BEFORE sale. Document residency. (11) INSTALLMENT SALE — spread gain over multiple years to stay in lower bracket. (12) INVEST IN IRR (Treasury) over taxable cap gains-generating funds — tax-free at federal level (state varies). HIGH NET WORTH ($1M+ gains): work with CPA + tax attorney. Save 5-10% effective tax rate via professional planning.

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.