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 break down the 2024 rates for long-term capital gains and highlight the changes from last year's rates. We'll also look at newly released 2025 rates.
Below, we also consider short-term rates (ordinary income tax rates) and rates for special capital gains tax situations, including for collectibles and Net Investment Income Tax.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Note: For a detailed overview of capital gains tax basics, see Kiplinger’s report: What is Capital Gains Tax?
Long term rates
Long-term capital gains tax rate 2024
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 2023 and 2024 below, you can see the impact of inflation adjustments.
The 2024 capital gains tax rates have been adjusted upward, with thresholds increasing by about 5-6% across various filing statuses.
For instance, with single filers, the 0% rate now applies to incomes up to $47,025 in 2024, about a 5.4% increase from last year's threshold of $44,625.
The 20% rate threshold for single filers rose substantially from $492,300 last year to $518,900 for 2024.
For married couples filing jointly, the adjustments were similarly significant:
- The 0% rate threshold increased by 5.4%, from $89,250 in 2023 to $94,050 in 2024.
- The 20% rate threshold rose from $553,850 to $583,750.
Head of household filers also experienced notable changes:
- The 0% rate threshold increased by 5.4%, from $59,750 to $63,000.
- The 20% rate threshold jumped from $523,050 to $551,350
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.
2024 Long-Term Capital Gains Tax Rate Thresholds
| Capital GainsTax Rate | Taxable Income(Single) | Taxable Income(Married Filing Separate) | Taxable Income(Head of Household) | Taxable Income(Married Filing Jointly) |
| 0% | Up to $47,025 | Up to $47,025 | Up to $63,000 | Up to $94,050 |
| Row 2 - Cell 0 | Row 2 - Cell 1 | Row 2 - Cell 2 | Row 2 - Cell 3 | Row 2 - Cell 4 |
| 15% | $47,026 to $518,900 | $47,026 to $291,850 | $63,001 to $551,350 | $94,051 to $583,750 |
| 20% | Over $518,900 | Over $291,850 | Over $551,350 | Over $583,750 |
If you haven't filed your 2023 return or want to see how all the taxable income thresholds changed, here are the numbers for the 2023 tax year.
2023 Long-Term Capital Gains Tax Rate Income Thresholds
| Capital GainsTax Rate | Taxable Income(Single) | Taxable Income(Married Filing Separate) | Taxable Income(Head of Household) | Taxable Income(Married Filing Jointly) |
| 0% | Up to $44,625 | Up to $44,625 | Up to $59,750 | Up to $89,250 |
| 15% | $44,626 to $492,300 | $44,626 to $276,900 | $59,751 to $523,050 | $89,251 to $553,850 |
| 20% | Over $492,300 | Over $276,900 | Over $523,050 | Over $553,850 |
Planning ahead: 2025 Capital Gains Tax Rate Income Thresholds
The IRS has released the 2025 long-term capital gains income thresholds. These represent an increase of about 2.8% from 2024 levels, which aligns with the inflation-adjusted tax brackets for 2025.
The thresholds are listed below, but for more information on the new numbers, see IRS Unveils 2025 Long-Term Capital Gains Tax Thresholds.
| Capital GainsTax Rate | Taxable Income(Single) | Taxable Income(Married Filing Separate) | Taxable Income(Head of Household) | Taxable Income(Married Filing Jointly) |
| 0% | Up to $48,350 | Up to $48,350 | Up to $64,750 | Up to $96,700 |
| 15% | $48,351 to $533,400 | $43,351 to $300,000 | $64,751 to $566,700 | $96,701 to $600,050 |
| 20% | Over $533,401 | Over $300,000 | Over $566,700 | Over $600,050 |
Short term rates
Short-term capital gains tax rates
Short-term capital gains are for assets held for one year or less. They are taxed at the same rates as ordinary income. As a result, depending on your taxable income and tax bracket, these rates range from 10% to 37%.
Like long-term capital gains, ordinary federal income tax rates are adjusted yearly for inflation. For information, see 2024 Federal Tax Brackets and Income Tax Rates.
Other considerations
Special capital gains tax rate situations
What is the 3.8% capital gains tax?
In addition to the capital gains tax, a 3.8% Net Investment Income Tax (NIIT) might apply to some taxpayers. This surtax is part of the Affordable Care Act and is sometimes called “the Medicare surtax.”
It applies to those with modified adjusted gross income (MAGI) above certain thresholds:
- $200,000 for single filers
- $250,000 for married couples filing jointly
- $125,000 for married individuals filing separately
Net investment income includes taxable interest, dividends, capital gains, passive rents, annuities, and royalties. The surtax is calculated using Form 8960.
For more information, see Medicare Tax: Five Things Every Worker Needs to Know, and What is Net Investment Income Tax and Who Pays?
Capital gains tax rate for collectibles
Gains from selling collectibles such as art, antiques, and precious metals are taxed at a maximum rate of 28%. This rate only affects long-term gains; short-term gains from collectibles are taxed as ordinary income.
Note: For this special rule, the IRS says a "collectible" can be antiques, a work of art, a stamp, a coin, a bottle of wine or other alcoholic beverage, gold or other precious metal, a gem, a historic object, or another similar item.
If you sell an interest in a partnership, S corporation, or trust, any gain from that sale attributable to the unrealized appreciation in the value of collectibles is also treated as gain from the sale of collectibles.
Capital gains tax rate for Qualified Small Business Stock
Some or all of your gain may be tax-free for qualified small business stock (QSBS) held for at least five years. For the remaining gains, a maximum tax rate of 28% applies. (This doesn't affect short-term gains taxed at ordinary income rates.)
As with the 28% rate for collectibles, if your ordinary tax rate is below 28%, that rate will apply to taxable QSBS gain.
Capital gains tax rate for depreciation
If you sell real estate with previously claimed depreciation deductions, you might face a capital gains tax of up to 25% on the unrecaptured depreciation.
Note: This taxable amount is known as "unrecaptured Section 1250 gain" (named after the tax code section covering gain from the sale or other disposition of certain depreciable real property).
- The rest of the long-term gain is taxed at standard long-term rates.
- The 25% rate applies only to long-term gains.
Capital gains tax rates: Bottom line
Understanding capital gains tax rates is important for financial planning. If you expect significant gains from investments, it's a good idea to calculate your potential tax liability and plan accordingly.
Additionally, stay informed about annual changes in tax rates and thresholds to make the most of your investments. Planning can help minimize your potential tax liability while you maximize your returns.
Related
-
Tax Credit vs. Tax Deduction: What’s the Difference?Tax Breaks Your guide to tax deductions and credits, how the IRS treats them differently, and how they impact your tax bill.
-
Premium Tax Credit: Are You Eligible For This Health Insurance Tax Break?Tax Credits The tax credit can help qualifying individuals pay for coverage from the Affordable Care Act’s health insurance marketplace.
-
FSA Contribution Limits Are Higher for 2025FSA A flexible spending account allows you to build tax-free savings for certain medical expenses.
-
Florida Tax Deadline Extension: What You Need to KnowTax Relief The IRS extended federal tax return file time due to severe storms.
-
IRS: Here’s How to Recover Your Tax Records After a Natural DisasterTax Records Your tax documents can help you get federal relief faster, the IRS says.
-
Voters Approve New Veteran Property Tax ReliefTax Relief Thanks to the election, some Veterans will soon see expanded property tax exemptions.
-
Nevada Approves Diaper Tax Relief Amid Childcare CrisisTax Relief Nevada voters have expanded sales tax relief to diapers. But are prices still too high?
-
Earned Income Tax Credit (EITC) 2024: How Much Will You Get?Tax Credits The refundable amount for workers with or without children is slightly higher this year. Here’s what you need to know.
