The IRS announced a raft of changes to tax rules for tax year 2026 on Thursday, including higher brackets for capital gains tax.
A quick reminder of how these work. If you sell an investment you hold in a taxable account for more than you paid for it, you realize a capital gain. Profits on investments you’ve held for a year or less are taxed at your regular income tax rate (the IRS announced boosts to those brackets, too).
Profits on assets you’ve held for longer than a year are subject to the long-term capital gains rate, which, depending on your income, is either 0%, 15% or 20%.
The upshot of the IRS changes is that you can make more money next year and still qualify for a lower rate on your gains. For the purposes of these brackets, the IRS looks at your taxable income, found by subtracting any deductions, standard or itemized, from your gross income for the year.
For 2026, individuals with taxable income up to $49,450 qualify for the 0% rate, as do married couples filing jointly with incomes up to $98,900.
Individual filers qualify for the 15% rate if they earn $545,500 or less, as do married joint filers earning up to $613,700. Exceed those amounts, and you’ll owe 20% on your gains.
The new rates apply for investments you sell in the next calendar year, but it’s still worth thinking about your tax picture for 2025. The last quarter of the year is a popular time for investors and their financial planners to think about capital gains. That’s because, if you sold something at a profit this year, you still have until Dec. 31 to lower your tax burden.
Should you own any investments that are currently worth less than what you paid for them, selling them will trigger a capital loss, which the IRS allows you to use to offset gains you’d otherwise owe tax on.
At first, like must offset like: short-term losses offset short-term gains, and long-term losses offset long-term gains. From there, any excess losses can be used to negate the opposite kind of gain.
Selling underperforming investments to offset gains you’ve earned from your winners is a strategy known as “tax-loss harvesting.” If you have taxable gains from earlier this year, talk to a financial professional to see if the strategy makes sense for you and to avoid running afoul of any IRS rules.
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