Updated October 1, 2026. Quick answer: A short-term capital gain, from an asset held one year or less, is taxed with your other income at your ordinary 2026 rate, 10% to 37%, and not at the lower long-term capital gains rates. IRS Topic 409 sets the holding period, and Revenue Procedure 2025-32 sets the 2026 brackets.
Your state may tax the same gain on top of the federal tax: capital gains tax by state, all 51 jurisdictions.
Price a sale against the 2026 capital gains rates: capital gains tax calculator.
The IRS form or worksheet behind this, read line by line: tax-loss harvesting explained.
The one-year line
The IRS says “Generally, if you hold the asset for more than one year before you dispose of it, your capital gain or loss is long-term. If you hold it one year or less, your capital gain or loss is short-term.” It also says “If you have a net capital gain, a lower tax rate may apply to the gain than the tax rate that applies to your ordinary income.” That net capital gain is defined from long-term gains, so a short-term gain gets no lower rate: it is added to your other income and taxed at the brackets below.
2026 ordinary brackets, single filers
| Rate | Taxable income | Tax at the start of the bracket |
|---|---|---|
| 10% | Up to $12,400 | $0 |
| 12% | Over $12,400 up to $50,400 | $1,240 |
| 22% | Over $50,400 up to $105,700 | $5,800 |
| 24% | Over $105,700 up to $201,775 | $17,966 |
| 32% | Over $201,775 up to $256,225 | $41,024 |
| 35% | Over $256,225 up to $640,600 | $58,448 |
| 37% | Over $640,600 | $192,979.25 |
These are the single-filer rows of the tax rate tables in Revenue Procedure 2025-32. Joint, head of household and separate-return tables are in the same document.
What a day can cost: a worked example
Take a single filer with $60,000 of other taxable income who sells a holding for a $10,000 gain, both illustrations and not source figures. The 22% bracket runs to $105,700, so the whole gain stays inside it. Sold after 11 months, the gain is short-term and the tax is $2,200 (22% of the gain). Sold after 13 months, the gain is long-term; at the 15% rate the tax is $1,500. The difference is $700. The same Revenue Procedure puts the top of the 0% long-term rate at $49,450 and the top of the 15% rate at $545,500 for single filers, so this filer is in the 15% rate. The example is computed here and is not an IRS example.
The 3.8% add-on
Higher earners can owe another layer. The IRS says “Individuals with significant investment income may be subject to the net investment income tax (NIIT).” Topic 559 sets it at “3.8 percent” of the lesser of net investment income or the excess of modified adjusted gross income over $200,000 for single filers, $250,000 for married filing jointly and $125,000 for married filing separately.
Common mistakes
- Selling on the one-year anniversary. Short-term means one year or less, so the holding must pass the anniversary.
- Using the 0%, 15% or 20% rates for a short-term gain. Those apply to long-term gains only.
- Forgetting the 3.8% net investment income tax above the threshold.
- Netting gains without separating short and long term first.
Related: the long-term capital gains rates page, the capital gains harvest window, the 2026 retirement numbers hub, and the 2026 tax brackets for every filing status.
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Answer againSources
- IRS Tax Topic 409, Capital gains and losses: https://www.irs.gov/taxtopics/tc409
- IRS Revenue Procedure 2025-32, 2026 inflation adjustments: https://www.irs.gov/pub/irs-drop/rp-25-32.pdf
- IRS Tax Topic 559, Net investment income tax: https://www.irs.gov/taxtopics/tc559
Sources: the primary documents linked above, read on October 1, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.