Capital Gains Tax Updates for 2026: What Investors Should Know
Capital gains taxes impact investors’ portfolios, retirement accounts, and real estate transactions. Changes expected in 2026 could affect tax rates, exemptions, and planning strategies. Understanding these updates now can help investors minimize tax liability and optimize investment outcomes.
Overview
As we approach 2026, investors need to be aware of the capital gains tax updates that could impact their tax strategies. While the overall structure of capital gains taxes remains similar, there are important updates and inflation adjustments that investors should plan for. Here’s what you need to know to navigate the changes.
Long-Term Capital Gains Rates
In 2026, long-term capital gains (on assets held over one year) will continue to be taxed at preferential rates of 0%, 15%, and 20% depending on your income. These rates remain favourable compared to short-term gains, which are taxed at ordinary income rates. The income thresholds for these brackets will be adjusted for inflation, allowing for slight increases in the amount of income taxed at each rate.
Short-Term Capital Gains
Short-term capital gains (on assets held for one year or less) will still be taxed as ordinary income, which ranges from 10% to 37% based on your taxable income.
Net Investment Income Tax (NIIT)
Investors with high incomes may still face a 3.8% Net Investment Income Tax (NIIT) on capital gains, bringing the total effective tax rate on long-term gains to 23.8% for some.
Opportunity Zone Investments
Investments in Qualified Opportunity Funds (QOFs) may still allow for capital gains deferrals and potential exclusions if the investment is held for long enough, making it a smart strategy for tax-savvy investors.
State Taxes
Remember that state capital gains tax rules vary. While federal rates remain steady, some states impose their own capital gains taxes, often at a higher rate. Be sure to understand your state’s treatment of capital gains to avoid surprises come tax season.
Planning Tips
- Hold Assets Longer: To benefit from lower long-term rates, try to hold investments for over one year.
- Tax-Loss Harvesting: Offset gains with losses from other investments to reduce your taxable income.
- Timing is Key: Plan the sale of investments around your expected income to maximize tax efficiency.
Conclusion
Capital gains tax rules for 2026 largely retain the existing framework, but inflation adjustments and the possibility of higher state taxes mean investors need to stay proactive. By planning strategically, especially regarding the timing of sales and investments, investors can minimize tax burdens and make smarter financial decisions in the years ahead.