What is the tax bracket for long-term capital gains?

Long-term capital gains, gains on assets held more than one year, are taxed at one of three federal rates: 0%, 15%, or 20%. Which rate applies depends on the taxpayer's total taxable income (ordinary income plus the gain) and filing status, not on a separate capital-gains-only bracket structure. These rates sit well below the ordinary income brackets, which top out at 37%, and that gap is the entire reason holding period matters on a return: a gain held over one year gets taxed at 0/15/20%, while a gain held one year or less is just ordinary income, taxed at the client's regular marginal rate.

How do the income thresholds work for 2026?

For 2026, the 0% rate applies to taxable income up to $49,450 for single filers, $98,900 for married filing jointly, $49,450 for married filing separately, and $66,200 for head of household. Above those amounts, the 15% rate applies up to $545,500 (single), $613,700 (married filing jointly), $306,850 (married filing separately), and $579,600 (head of household). Income above those upper breakpoints is taxed at 20%. These are IRS-published, inflation-adjusted figures for tax year 2026 under Revenue Procedure 2025-32, and they move every year. A preparer who reaches for last year's thresholds on a 2026 return will misstate the client's actual capital gains rate.

Does the capital gain sit on top of ordinary income or in its own bracket?

Long-term capital gains stack on top of ordinary income rather than sitting in an isolated bracket. Ordinary income fills the bracket first, and the capital gain gets taxed at whatever rate the income lands on above that point. Take a client with $40,000 of ordinary income and a $30,000 long-term gain. That gain doesn't get treated as if the client's income were zero. The ordinary income uses up the lower part of the 0% bracket first (up to the single-filer threshold of $49,450), which leaves $9,450 of room in the 0% bracket for the gain. The first $9,450 of the gain is taxed at 0%, and the remaining $20,550 falls into the 15% bracket. This stacking rule is why one large gain can push a client from the 0% or 15% bracket into a higher one without the client's wage income changing at all.

What's the default case a preparer should check first?

For most individual clients, 15% is the rate to assume by default, since the 15% bracket spans the widest range of taxable income for every filing status. The first check on any return with a long-term gain is whether total taxable income, before the gain, sits low enough to capture some or all of it at 0%. That's the case most often missed on a rushed return. Retirees, clients coming off a low-income year, or clients who happened to sell in a year with unusually light ordinary income are the ones most likely to qualify for the 0% rate, and the ones most likely to lose it if the sale isn't sequenced correctly against other income in the same year.

Are there any add-on taxes beyond the 0/15/20% rate?

Yes. The 3.8% Net Investment Income Tax can apply on top of the capital gains rate for higher-income taxpayers, using separate, non-inflation-indexed MAGI thresholds: $250,000 for MFJ, $200,000 for single or head of household, $125,000 for MFS. NIIT is a distinct tax under IRC Section 1411, calculated on Form 8960, and it stacks on top of whichever capital gains rate already applies. A taxpayer in the 20% capital gains bracket who also crosses the NIIT threshold can face a combined 23.8% federal rate on the gain. On the return, this shows up as capital gain flowing through the Schedule D worksheet to set the rate, with Form 8960 calculated separately off MAGI to layer NIIT on top; a preparer projecting a client's total tax on a sale needs to check both thresholds, not just the capital gains bracket, before advising on timing a sale into a particular year.