What is the Net Investment Income Tax (NIIT)?

The NIIT is an additional 3.8% tax on net investment income for higher earners. It applies to single filers with modified adjusted gross income above $200,000 and married filing jointly above $250,000. Capital gains count as investment income for NIIT purposes, so high earners can face an effective rate of up to 23.8% on long-term gains.

What is the difference between short-term and long-term capital gains?

Short-term capital gains apply to assets held one year or less and are taxed at your ordinary income tax rate, up to 37%. Long-term capital gains apply to assets held longer than one year and benefit from preferential rates of 0%, 15%, or 20%, which are significantly lower than ordinary income rates for most taxpayers.

Tax Guide

Capital Gains Tax Rates 2025: Long-Term, Short-Term, and NIIT

Updated April 2026 | Based on IRS Rev. Proc. 2024-40 | Tax year 2025 (filed in 2026)

In 2025, long-term capital gains are taxed at 0%, 15%, or 20% depending on your total taxable income. Short-term gains are taxed as ordinary income. High earners may also owe an additional 3.8% Net Investment Income Tax on top of these rates.

Quick Answer: 2025 Long-Term Capital Gains Rates

Three rates depending on your income and filing status

0% Low and moderate income earners. Single filers with taxable income up to $48,350.

15% Most middle and upper-middle earners. Single filers from $48,350 to $533,400.

20% Highest earners only. Single filers with taxable income above $533,400.

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2026 Rates (Projected)

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Long-Term Rates by Filing Status

2025 Long-Term Capital Gains Brackets

Long-term capital gains apply to assets held more than one year. The thresholds below are based on taxable income, which is gross income minus your deduction.

Rate	Taxable Income Threshold	Notes
0%	Up to $48,350	No tax on long-term gains if total taxable income is in this range
15%	$48,350 to $533,400	Applies to the gain amount that falls within this range
20%	Over $533,400	Top rate for highest earners; NIIT may also apply

Rate	Taxable Income Threshold	Notes
0%	Up to $96,700	Roughly double the single filer threshold
15%	$96,700 to $600,050	Covers most married filers with investment income
20%	Over $600,050	Top rate; NIIT threshold is $250,000 MAGI

Rate	Taxable Income Threshold	Notes
0%	Up to $64,750	Higher than single, lower than married jointly
15%	$64,750 to $566,700	Broad middle range for head of household filers
20%	Over $566,700	Top rate; NIIT threshold is $200,000 MAGI

Rate	Taxable Income Threshold	Notes
0%	Up to $48,350	Same as single filer threshold
15%	$48,350 to $300,000	Top of 15% bracket is lower than other statuses
20%	Over $300,000	Top rate triggers earlier for separate filers

How the brackets work with gains: Long-term capital gains are stacked on top of your other taxable income. If your ordinary taxable income is $40,000 and you have a $20,000 long-term gain, the first $8,350 of the gain fills the 0% bracket (up to $48,350) and the remaining $11,650 is taxed at 15%.

Short-Term vs. Long-Term

Short-Term vs. Long-Term Capital Gains Tax Rates

The single most impactful tax decision for investors is often how long they hold an asset before selling. Holding for more than one year unlocks significantly lower rates.

Long-Term (held over 1 year)

Tax rates0%, 15%, or 20%

Determined byTotal taxable income

Most common rate15%

Qualifying periodMore than 365 days

NIIT applies?Yes, if income is high

Short-Term (held 1 year or less)

Tax rates10% to 37%

Determined byOrdinary income brackets

Most common rate22% or 24%

Qualifying period365 days or fewer

NIIT applies?Yes, if income is high

Holding period tip: The holding period starts the day after you acquire the asset and ends on the day you sell it. If you bought on January 15, 2024, you need to sell on January 16, 2025 or later to qualify for long-term rates.

Net Investment Income Tax

The 3.8% Net Investment Income Tax (NIIT)

High earners pay an additional 3.8% NIIT on top of their capital gains rate. This can push the effective top rate on long-term gains to 23.8% and short-term gains to as high as 40.8%.

Filing Status	MAGI Threshold	NIIT Rate	Max Combined LT Rate
Single	$200,000	3.8%	23.8%
Married Filing Jointly	$250,000	3.8%	23.8%
Married Filing Separately	$125,000	3.8%	23.8%
Head of Household	$200,000	3.8%	23.8%

NIIT is calculated on the lesser of: your net investment income OR the amount by which your MAGI exceeds the threshold. You do not necessarily pay 3.8% on all investment income once you cross the threshold, only on the amount above it or your total net investment income, whichever is smaller.

Worked Example

How Capital Gains Tax Is Calculated in Practice

A single filer with $60,000 of ordinary taxable income sells stock held for two years for a $30,000 long-term gain.

Single filer, $60,000 ordinary taxable income, $30,000 long-term gain (2025)

Ordinary taxable income $60,000

Long-term gain $30,000

0% bracket remaining ($48,350 - $60,000 = $0 remaining) $0 at 0%

15% bracket applies to full $30,000 gain $4,500 at 15%

NIIT (MAGI $90,000 is below $200,000 threshold) $0

Total capital gains tax $4,500

Effective rate on the gain 15.0%

Compare to short-term: If that same $30,000 gain were short-term, it would be taxed as ordinary income at 22% (the bracket for income between $48,475 and $103,350), resulting in $6,600 in tax instead of $4,500. Holding the extra year saved $2,100 in this example.

Special Cases

Capital Gains Rules for Specific Asset Types

Asset Type	2025 Tax Treatment
Stocks and ETFs	Standard long-term (0/15/20%) or short-term rates based on holding period
Cryptocurrency	Treated as property by the IRS. Same long-term and short-term rules apply. Each sale or exchange is a taxable event.
Real estate (primary home)	Exclusion of up to $250,000 ($500,000 MFJ) of gain if you owned and lived in it 2 of the last 5 years. Gain above the exclusion taxed at LT rates.
Real estate (investment property)	LT rates apply to gain, but depreciation recapture is taxed at up to 25%
Collectibles (art, coins, stamps)	Maximum rate of 28% for long-term gains, regardless of income
Small business stock (Section 1202)	Up to 100% exclusion of gain possible for qualified small business stock held more than 5 years
Inherited assets	Generally receive a stepped-up basis to fair market value at date of death, eliminating prior gains

FAQ

Frequently Asked Questions

What are the capital gains tax rates for 2025?

For 2025, long-term capital gains rates are 0%, 15%, or 20% depending on your total taxable income and filing status. Single filers pay 0% up to $48,350, 15% from $48,350 to $533,400, and 20% above that. Short-term gains on assets held one year or less are taxed at ordinary income rates of 10% to 37%.

What qualifies as a long-term capital gain?

A long-term capital gain applies to assets you held for more than one year before selling. The holding period starts the day after acquisition and ends on the sale date. Assets held exactly 365 days or fewer are short-term. Most stocks, ETFs, real estate, and cryptocurrency follow these same rules.

Can capital losses offset capital gains?

Yes. Capital losses offset capital gains dollar for dollar. Short-term losses offset short-term gains first, then long-term gains. Long-term losses offset long-term gains first, then short-term gains. If total losses exceed total gains, you can deduct up to $3,000 of the net loss against ordinary income per year, with any remainder carried forward indefinitely.

Do I owe capital gains tax if I reinvest the proceeds?

Yes. The sale of an asset is a taxable event regardless of what you do with the proceeds. Reinvesting does not defer or eliminate the gain. The only exceptions are specific tax-advantaged structures like a 1031 exchange for real estate, which defers gain when proceeds are reinvested into a like-kind property.

Are capital gains taxed at the state level too?

Yes, most states tax capital gains as ordinary income at the state level. A handful of states like Texas, Florida, and Nevada have no state income tax and therefore no state capital gains tax. California has one of the highest combined rates because it taxes gains as ordinary income with a top rate of 13.3%.

How is cryptocurrency taxed for capital gains?

The IRS treats cryptocurrency as property, not currency. Selling, trading, or using crypto to buy goods is a taxable event. The same long-term and short-term rates apply based on your holding period. You calculate gain or loss using your cost basis (what you paid) subtracted from your proceeds (what you received).

What is tax-loss harvesting?

Tax-loss harvesting is the practice of selling investments at a loss to offset capital gains in the same tax year, reducing your taxable gain and therefore your tax bill. You must be careful to avoid the wash-sale rule, which disallows the loss if you buy the same or substantially identical security within 30 days before or after the sale.

Disclaimer: This page provides federal capital gains tax rate information for educational purposes based on IRS guidance for tax year 2025. It does not account for state taxes, depreciation recapture, wash-sale rules, AMT, or every individual tax situation. It is not tax, legal, or financial advice. Consult a qualified tax professional before making investment or tax decisions.