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Capital gains taxes are levied on profits from the sale of assets like stocks, mutual funds, and real estate. The rate at which these gains are taxed depends on your taxable income and how long you’ve held the asset. But keep in mind that capital gains tax rates are generally lower than the tax rates for ordinary income, like wages.
Let’s examine the 2025 rates for long-term capital gains (assets held for more than a year) and highlight the changes from last year’s rates. We will also review the new IRS threshold brackets for 2026.
Additionally, we will discuss short-term rates (ordinary income tax rates) and rates for specific capital gains tax situations, including those applicable to collectibles and the Net Investment Income Tax.
Long-term capital gains tax rates
Long-term capital gains tax rates apply to assets held for more than a year. These rates are structured to encourage long-term investment.
The rates are 0%, 15%, or 20%, depending on your income level; essentially, the higher your income, the higher your rate. The income thresholds for long-term capital gains are adjusted annually for inflation.
If you compare the capital gains tax rates from 2024 and 2025 below, you can see the impact of inflation adjustments.
The 2025 capital gains tax thresholds increased by about 2.8% across various filing statuses from the prior year.
For instance, with single filers, the 0% rate now applies to incomes up to $48,350 in 2025, up from last year’s threshold of $47,025.
The 20% rate threshold for single filers rose substantially from $518,900 in 2024 to $583,400 for 2025.
For married couples filing jointly:
- The 0% rate threshold increased by 2.82%, from $94,050 last year to $96,700 for 2025.
- The 20% rate threshold rose from $588,750 to $600,050.
Head of household filers also experienced changes:
- The 0% rate threshold increased by about 2.78%, from $63,000 last year to $64,750 for 2025.
- The 20% rate threshold jumped from $551,350 to $566,700
These inflation adjustments are designed to prevent “bracket creep,” where taxpayers might be pushed into higher tax brackets due to inflation rather than actual increases in real income.
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