Capital Gains Tax: Long and Short-Term Rates for 2026-2027

If you own investments or regularly sell assets, it's important to understand the potential tax implications.

What are capital gains?

When you sell a capital asset for a higher price than its original value, the money you make on that sale is called a capital gain. And when you sell an asset for less than its original value, the money you lose is known as a capital loss.

The difference between your capital gains and your capital losses is your net capital gain. For example, if you sold a stock for a $10,000 profit this year and sold another at a $4,000 loss, your net capital gain is $6,000.

Most items people own are considered capital assets. This can include investments, such as stocks, bonds, cryptocurrency or real estate, as well as personal and tangible items, such as cars or boats.

What is capital gains tax?

Capital gains taxes are owed on profits made from the sale of assets. How much you pay depends on what you sold, how long you owned it before selling, your taxable income and your filing status. Capital gains can be subject to either short-term tax rates or long-term tax rates.

Some exceptions:

• High-earning individuals may also need to account for the net investment income tax (NIIT), an additional 3.8% tax that can be triggered if your income exceeds a certain limit.

• Long-term capital gains on so-called “collectible assets” can be taxed at a maximum of 28%. This includes items such as coins, precious metals, antiques and fine art. Short-term gains on such assets are taxed at the ordinary income tax rate

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  Internal Revenue Service. Topic No. 409 Capital Gains and Losses: Capital Gain Tax Rates. Accessed Nov 6, 2026. View all sources .

»MORE: Calculate your capital gains tax

What is long-term capital gains tax?

Profits from the sale of an asset held for more than a year are subject to long-term capital gains tax. The long-term capital gains tax rates are 0%, 15% or 20%, depending on taxable income and filing status. Per the IRS, most people pay no more than 15%

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IRS.gov. Topic no. 409, Capital gains and losses. Accessed Nov 6, 2026. View all sources .

What is short-term capital gains tax?

Short-term capital gains tax is a tax on profits from the sale of an asset held for one year or less. Short-term capital gains are treated as regular income and taxed according to ordinary income tax brackets: 10%, 12%, 22%, 24%, 32%, 35% or 37%.

» MORE: See which tax bracket you're in

Capital gains tax rate 2026

The following rates and brackets apply to long-term capital gains on assets sold in 2026, which are reported on taxes filed in April 2027 (or by Oct. 15, 2027, with an extension).

Capital gains tax rate 2027

The following rates and brackets apply to long-term capital gains on assets sold in 2027, which are reported on taxes filed in 2028.

» MORE: Taxes on stocks

How to reduce or avoid capital gains taxes

1. Hold on

Whenever possible, hold an asset for more than a year so you can qualify for the long-term capital gains tax rate, because it's significantly lower than the short-term capital gains rate for most assets. Our capital gains tax calculator shows how much that could save. Keep in mind that prices can fall while you wait, so tax savings shouldn't be the only factor in deciding when to sell.

2. Use tax-advantaged accounts

These include 401(k) plans, individual retirement accounts and 529 college savings accounts, in which the investments grow tax-free or tax-deferred. That means you don’t have to pay capital gains tax if you sell investments within these accounts. Roth IRAs and 529 accounts, in particular, have big tax advantages. If you follow the account rules, you can withdraw money from those accounts tax-free. With traditional IRAs and 401(k)s, your money grows tax-deferred, then you pay taxes when you take distributions in retirement.

3. Rebalance with dividends

Rather than reinvest dividends in the investment that paid them, consider rebalancing by putting that money into your underperforming investments. Typically, you'd rebalance by selling securities that are doing well and putting that money into those that are underperforming. But using dividends to invest in underperforming assets will allow you to avoid selling strong performers, and thus avoid the capital gains that would come from that sale. Whether this makes sense depends on your goals and risk tolerance, and this tactic likely won't fully rebalance a portfolio if the asset allocation as significantly drifted.

4. Look into tax-loss harvesting

The IRS taxes your net capital gain, which is calculated by first netting your short-term gains against short-term losses and your long-term gains against long-term losses separately, then combining those to results (your gains minus your losses). The strategic practice of selling off specific assets at a loss to offset gains is called tax-loss harvesting. This strategy has many rules and isn't right for everyone, but it can help to reduce your taxes by lowering the amount of your taxable gains. Beware of the wash-sale rule, which can disallow a loss if you buy a substantially identical investment within 30 days before or after the sale.

If your net capital loss exceeds your net capital gains, you can also offset your ordinary income by up to $3,000 ($1,500 for those married filing separately). Any additional losses can be carried forward to future years to offset capital gains or up to $3,000 of ordinary income per year.

5. Use the home sales exclusion

If you sold a house, you may be able to exclude a portion of the gains from that sale on your taxes. To qualify, you must have owned your home and used it as your main residence for at least two years in the five-year period before you sell it. You also must not have excluded another home from capital gains in the two-year period before the home sale. If you meet those rules, you can exclude up to $250,000 in gains from a home sale if you’re single, and up to $500,000 if you’re married filing jointly

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IRS.gov. Topic no. 701, Sale of your home. Accessed Nov 7, 2026. View all sources .

» MORE: Learn how capital gains on home sales work

6. Consider a financial advisor

Depending on how complex your situation is, you might get help from a financial advisor, robo-advisor or decide to handle things yourself. "Financial advisor" is a general term that isn't regulated, though, which means anyone can use it. Advisors can help you know how and when to take advantage of smart tax strategies in ways that are best for your specific financial situation and goals, but they charge fees, commonly around 1% of assets under management (AUM) per hear, which would be about $5,000 annually on a $500,000 portfolio. To check an advisor's background, use the SEC's IAPD and FINRA's BrokerCheck. You can also search the CFP Board, NAPFA, the Garrett Planning Network or XY Planning Network.

» Need help strategizing? See our picks for the top financial advisors