How does the 0% capital gains tax bracket work?
Long-term gains are not taxed federally up to a taxable income limit. The gain stacks on top of your other income, so your room is what is left under the line.
The 2026 limits
Long-term capital gains, on assets held more than a year, are taxed at 0% if your total taxable income, including the gain, is at or below $49,450 for a single filer or $98,900 for a married couple filing jointly. The 15% rate applies up to $545,500 single and $613,700 joint, and 20% above that.
How the stacking works
Your ordinary income fills the bottom first, then gains sit on top. A married couple with $60,000 of taxable income before any gain has $38,900 of room under $98,900. If they realize a $50,000 gain, $38,900 is taxed at 0% and the remaining $11,100 at 15%, about $1,665 of federal tax. Only the part over the line is taxed.
Qualified dividends use the same room
Qualified dividends are taxed at the same 0%, 15% and 20% rates and count as part of your taxable income, so they use up room alongside your gains.
Selling and buying back
The wash-sale rule applies to losses, not gains. Selling an investment at a gain and buying it back resets your cost basis, which can reduce the tax on a later sale. You still report the gain for the year you sold.
Watch the side effects
- Medicare: gains are part of adjusted gross income, so they can raise IRMAA two years later.
- ACA subsidies: gains count as income even at a 0% federal rate.
- Net investment income tax: 3.8% can apply when income is above $200,000 single or $250,000 joint.
- State tax: many states tax gains even when the federal rate is 0%.
Is there a capital gains exemption after 65?
No. There is no age-based exemption. Homeowners can exclude up to $250,000 of gain on a main home, or $500,000 for a married couple filing jointly, if they owned and lived in it for at least two of the five years before the sale.
Common questions
Do capital gains raise my Medicare premium?
They can. Gains are part of adjusted gross income, which Medicare uses two years later to set IRMAA.
Does the 0% rate apply to stock I held less than a year?
No. Gains on assets held a year or less are taxed as ordinary income.
Can I sell and rebuy the same stock to use the 0% bracket?
Yes for gains, since the wash-sale rule only disallows losses. Selling resets your basis, but you still report the gain.
Keep reading
Sources: IRS Rev. Proc. 2025-32; IRS: net investment income tax; IRS Topic 701: sale of your home