2026 capital gains tax rates at a glance
Long-term capital gains (on assets held more than one year) are taxed at 0%, 15% or 20%, depending on your total taxable income. For 2026 the IRS raised the income limits for each rate by about 2.3% for inflation. Short-term gains (held one year or less) are taxed as ordinary income, at your regular bracket.
These are the 2026 thresholds from IRS Revenue Procedure 2025-32. They apply to sales made from January 1 to December 31, 2026, which you'll report on the return you file in 2027.
2026 long-term capital gains brackets
| Filing status | 0% rate | 15% rate | 20% rate |
|---|---|---|---|
| Married filing jointly | up to $98,900 | $98,901 – $613,700 | over $613,700 |
| Single | up to $49,450 | $49,451 – $545,500 | over $545,500 |
| Head of household | up to $66,200 | $66,201 – $579,600 | over $579,600 |
| Married filing separately | up to $49,450 | $49,451 – $306,850 | over $306,850 |
The thresholds are based on taxable income, after deductions, and the gain itself counts toward it. Your ordinary income fills the brackets first, and the gain stacks on top. So a retired couple with a small pension can have much of a large gain taxed at 0%, while a working couple with the same gain pays 15% on all of it. The examples below show how.
For comparison, the 2025 thresholds were $96,700 and $600,050 for joint filers, $48,350 and $533,400 for single filers, and $64,750 and $566,700 for heads of household.
The other rates that can apply
- 3.8% Net Investment Income Tax (NIIT). On top of the rates above, if your modified AGI is over $250,000 (married filing jointly), $200,000 (single or head of household) or $125,000 (married filing separately). These thresholds aren't indexed for inflation, so more people hit them every year. Gain you exclude on a home sale doesn't count as investment income, but any gain above the exclusion does.
- 25% on depreciation recapture. If you ever deducted depreciation on the home (a home office or a period as a rental), that part of the gain is taxed at up to 25% and can't be excluded.
- 28% on collectibles such as coins and art.
- Ordinary rates on short-term gains. The 2026 brackets for single filers are 10% up to $12,400, 12% up to $50,400, 22% up to $105,700, 24% up to $201,775, 32% up to $256,225, 35% up to $640,600 and 37% above. For joint filers the breakpoints are $24,800, $100,800, $211,400, $403,550, $512,450 and $768,700.
Selling your home: the $250,000 / $500,000 exclusion
Most homeowners never pay any of these rates on their house, because of the Section 121 exclusion. You can exclude up to $250,000 of gain ($500,000 on a joint return) if:
- You owned the home for at least 24 months of the 5 years before the sale, and
- You lived in it as your main home for at least 24 months of those 5 years (the months don't have to be consecutive), and
- You haven't used the exclusion on another home in the past 2 years.
For the full $500,000, either spouse can meet the ownership test but both have to meet the use test. A surviving spouse can still claim $500,000 if they sell within two years of the death and haven't remarried.
The exclusion isn't adjusted for inflation. It has been $250,000 / $500,000 since 1997, and the 2025 tax law (the One Big Beautiful Bill Act) didn't change it. Two bills in Congress would raise or remove the cap: the More Homes on the Market Act would double it and index it to inflation, and the No Tax on Home Sales Act would remove the limit altogether. Neither is law as of October 2026.
If you don't meet the two-year tests because you moved for a new job at least 50 miles farther away, for health reasons or after an unforeseeable event (death, divorce, job loss, a disaster), you can still get a partial exclusion. It's prorated: live there 12 months and you can exclude up to half, or $125,000 for a single filer.
Our full guide to capital gains tax when selling your home covers the partial exclusion, rentals and nonqualified use in more detail.
What selling a home costs in 2026: three examples
All three use the 2026 standard deduction ($32,200 joint, $16,100 single) and no other income or adjustments.
A working couple with a $600,000 gain
Married, $150,000 in wages, selling a home they've lived in for ten years at a $600,000 gain.
- Taxable gain: $600,000 − $500,000 exclusion = $100,000
- Taxable income: $150,000 + $100,000 − $32,200 = $217,800, of which $117,800 is ordinary income
- Their ordinary income already fills the 0% bracket, so the whole $100,000 is taxed at 15% = $15,000
- NIIT: modified AGI is exactly $250,000, so nothing. At $260,000 it would be 3.8% × $10,000 = $380.
A retired couple with the same gain
Married, $40,000 pension, same $600,000 gain.
- Taxable gain: $100,000. Taxable income: $40,000 + $100,000 − $32,200 = $107,800
- Ordinary income uses only $7,800 of the 0% room ($98,900), leaving $91,100 of the gain taxed at 0%
- The remaining $8,900 is taxed at 15% = $1,335
Same house, same gain, $13,665 less tax. If they're 65 or older, the extra standard deduction and the new $6,000 senior deduction would lower it further. For a large gain, it can pay to sell in a year when your other income is low.
A single seller with a $400,000 gain
Single, $200,000 in wages, $400,000 gain.
- Taxable gain: $400,000 − $250,000 = $150,000, all at 15% = $22,500
- NIIT: modified AGI is $350,000, which is $150,000 over the $200,000 threshold. 3.8% × $150,000 = $5,700
- Tax from the sale: $28,200
Lower your gain: count your basis correctly
Your gain is the sale price minus selling costs minus your basis, and most people undercount their basis. Basis is what you paid plus:
- Improvements that add value or extend the home's life: additions, a new roof, a fence, a driveway, landscaping, insulation, a water heater, new flooring
- Some closing costs from the purchase: recording fees, surveys, owner's title insurance
Ordinary repairs and maintenance, such as painting or fixing a leak, don't count, and neither do loan costs like points. Keep receipts for every improvement. Over 20 years they can add up to tens of thousands of dollars of gain you never pay tax on.
Two special cases:
- Inherited homes get a "stepped-up" basis equal to the value at the date of death, so selling soon after inheriting usually means little or no gain. See property taxes on an inherited house.
- Gifted homes keep the giver's original basis. Gifting a house to your children during your lifetime can leave them a much bigger tax bill than leaving it to them. That's one reason transfer on death deeds and lady bird deeds are popular.
Reporting the sale
The closing agent usually sends you Form 1099-S. If you get one, you have to report the sale on Form 8949 and Schedule D even when the whole gain is excluded. You can skip the form only if the sale was $250,000 or less ($500,000 if married), you certified to the closing agent that the full gain qualifies for the exclusion, and no 1099-S was issued. Any business or rental part of the property goes on Form 4797, and the NIIT is figured on Form 8960.
State taxes
Most states tax capital gains as ordinary income, on top of the federal rates. The nine states with no income tax on wages don't tax home sale gains either. Washington is a special case: it has a capital gains tax but exempts real estate. Since states with no income tax often make up for it with higher property taxes, compare both when you're deciding where to buy next. Our guide to moving states has the numbers.
Sources
2026 brackets, ordinary income brackets and the standard deduction are from IRS Revenue Procedure 2025-32 and the IRS's 2026 inflation adjustment release. 2025 thresholds are from IRS Topic 409. NIIT rules are from the IRS's NIIT questions and answers. The home sale exclusion, basis and reporting rules are from IRS Topic 701, Publication 523 and the Form 1099-S instructions. Bill details are from the bill texts on Congress.gov (H.R. 1340 and H.R. 4327). This is general information, not tax advice. For a large sale, have a tax professional check your numbers.