Capital Gains Taxes in 2026: What to Know

Big financial decisions can create capital gains, which makes capital gains taxes an important part of planning. The good news is the basic federal structure has been steady for a few years. The tricky part is that the total tax impact can still vary significantly depending on timing, income level, and state rules, especially in Massachusetts. 

What can trigger capital gains? 

Capital gains usually come from selling something that has increased in value. Common triggers include selling a home or second property, trimming a concentrated investment position, selling shares in a business, rebalancing or selling investments to pay for something important, or selling collectibles. The important part isn’t memorizing the list. It’s recognizing when a “one-time” decision could create a one-time tax year, so you have time to plan before the sale happens. 

What counts as a capital gain (and why does the timing matter)? 

A capital gain is generally the profit when you sell something for more than you paid for it. 

Timing matters because the IRS treats gains differently depending on how long you’ve owned the asset: 

• Long-term capital gains (typically assets held more than one year) receive preferential tax rates. 

• Short-term capital gains (typically one year or less) are generally taxed like ordinary income.  

That one-year line sounds simple, but it can change the after-tax outcome materially. It’s also one reason why “let’s just sell it” can be a very different decision before and after you look at the full picture. 

Are capital gains tax rates changing in 2026? 

No. For 2026, the federal long-term capital gains rate structure remains 0%, 15%, or 20%, based on your taxable income and filing status.  

Even when rates don’t “change,” your experience can still change because: 

• the income thresholds move each year with inflation adjustments (see chart below),  

• some households may be subject to the 3.8% Net Investment Income Tax (NIIT) on certain investment income.  

Reality check: capital gains planning isn’t about trying to outsmart the system. It’s about avoiding surprises and making sure a sale supports your bigger goals. 

What are the federal long-term capital gains thresholds for 2026? 

The IRS sets federal long-term capital gains tax rates at 0%, 15%, or 20%. These percentages are the tax rate on long-term capital gains (and often qualified dividends), and the rate you pay depends on your total taxable income for the year, not just the size of the gain. 

The dollar amounts below are taxable income thresholds (that is, income after deductions). Think of them as “brackets” for long-term capital gains: 

For incomes above the “15%” column, long-term gains are generally taxed at 20% at the federal level.  

What should Massachusetts residents know about capital gains in 2026? 

Massachusetts adds its own layer to capital gains planning. In general: 

• Most long-term capital gains are taxed at 5% in Massachusetts. 

• Short-term capital gains are taxed at 8.5%. 

• Massachusetts also imposes an additional 4% “Fair Share” surtax on taxable income above the annual threshold. For tax year 2026, the inflation-adjusted threshold is expected to be $1,107,950. In a “one-time event” year, a large capital gain can push part of your income over that line. The surtax applies only to the portion above $1,107,950, not to everything.  

This is one area where a little planning ahead can go a long way, especially once Massachusetts rules are part of the picture. 

Why does capital gains planning still matter if the rates are “stable”? 

Because in real life, what changes the tax result is often not the headline rate. It’s everything around it: 

• A one-time year where income is higher than normal 

• Selling part of a stock option concentrated position to diversify 

• Selling a long-held home, business, or real estate investment 

• Stacking gains on top of bonuses or equity compensation 

• Crossing into additional tax layers (like NIIT or Massachusetts surtax)  

That’s why the steady takeaway is still true in 2026: Capital gains are usually easiest to plan for before you sell, not after. 

What should you watch beyond 2026? 

Tax rules can and do change, but for many families the more immediate issue is simply that thresholds and planning opportunities change year to year. 

Two practical things to keep in mind: 

• The thresholds move annually, so a plan that made sense last year may not land the same way this year.  

• Your own life changes faster than the tax code. Major sales, career changes, equity events, and family decisions often drive the “surprise” years. 

Planning doesn’t eliminate taxes. It helps you make decisions intentionally, with fewer “I didn’t realize that would happen” moments. 

Thinking about selling an asset in 2026? 

If you’re considering a sale and want to understand how it fits into your bigger picture, we’d be glad to talk. We focus on coordinated planning so your investment decisions and tax planning decisions work together, and you’re not left carrying messages between professionals. 

Take the next step. No judgment. Just clarity, and a plan that fits your life’s road ahead. 

About the Author:

Nick Forgione is a Certified Public Accountant and holds a Master's Degree in Accounting from the University of Massachusetts Amherst. Since joining Sachetta in 2022 as an accountant, Nick has worked on projects on both the individual taxation and wealth management sides of our company.