What Is the Highest Long-Term Capital Gains Rate?
Learn how long-term capital gains tax rates vary based on income, filing status, and asset type, plus additional surtaxes that may apply.
Long-term capital gains taxes apply to profits from selling assets held for more than a year. These rates are generally lower than ordinary income tax rates, encouraging long-term investing. The rate you pay depends on income level and filing status.
Rate Tiers
Long-term capital gains tax rates are structured in brackets based on taxable income. Lower-income individuals pay little or no tax, while higher earners face increased rates.
Lower Rate
For individuals with lower taxable income, long-term capital gains may be taxed at 0%. In 2024, this applies to single filers with taxable income up to $47,025, married couples filing jointly up to $94,050, and heads of household earning no more than $63,000. These figures adjust annually for inflation.
Investors in this bracket can sell appreciated assets without incurring federal capital gains tax, benefiting retirees or those with limited income. However, state taxes may still apply. Those expecting to remain in this range can use strategies like harvesting gains to reset their cost basis without triggering federal taxes.
Middle Rate
Taxpayers with income exceeding the 0% threshold but below a higher cutoff fall into the 15% bracket. In 2024, this rate applies to single filers earning between $47,026 and $518,900, married couples filing jointly from $94,051 to $583,750, and heads of household between $63,001 and $551,350.
For many, this rate is lower than their ordinary income tax, making long-term investments attractive. Deductions and credits can reduce taxable income, potentially keeping an investor in a lower bracket. Those near the upper boundary should monitor realized gains, as exceeding the threshold pushes the excess into the highest bracket.
Highest Rate
For high-income taxpayers, the long-term capital gains rate reaches 20%. In 2024, this applies to single filers with taxable income above $518,900, married couples filing jointly exceeding $583,750, and heads of household earning more than $551,350.
At this level, tax planning is crucial. Investors may use tax-loss harvesting, gifting appreciated assets to family members in lower tax brackets, or donating to charities to offset gains. This rate does not include potential surtaxes or state levies, which can further increase the total tax burden. Spreading sales across multiple years may help reduce overall liability.
Additional Surtaxes
Certain high-income taxpayers face additional levies. The Net Investment Income Tax (NIIT) imposes a 3.8% surtax on investment earnings, including capital gains, dividends, and rental income. It applies to single filers with modified adjusted gross income (MAGI) over $200,000 and married couples filing jointly over $250,000. Since NIIT is based on MAGI rather than taxable income, deductions that lower taxable earnings may not reduce exposure to this surtax.
The NIIT is calculated separately from regular capital gains taxes. For example, a single filer with a $300,000 MAGI who realizes $50,000 in long-term capital gains would pay the standard 15% or 20% rate on the gains, plus an additional 3.8% NIIT on the portion exceeding $200,000. This raises the effective federal capital gains tax rate to 23.8% before state taxes.
State-level surtaxes can further increase tax liability. California taxes capital gains as ordinary income, leading to a top combined rate exceeding 37%. Other states, such as New York and Minnesota, impose additional levies on high earners. Some investors relocate to states with no capital gains tax, such as Florida or Texas, to reduce costs.
Specific Asset Categories
Different assets are taxed at varying long-term capital gains rates. Collectibles, including rare coins, artwork, antiques, and certain precious metals, face a maximum 28% tax rate—higher than the standard 20% top rate for most investments.
Real estate has unique tax considerations. While long-term capital gains from real estate follow standard brackets, depreciation recapture imposes an additional tax. When a property is depreciated to reduce taxable income, the IRS requires recapturing those deductions upon sale, taxing the recaptured amount at 25%. Real estate investors must account for this added liability. However, 1031 exchanges allow deferring capital gains taxes by reinvesting proceeds into a similar property under IRS guidelines.
Qualified small business stock (QSBS) under Section 1202 offers another distinct tax treatment. Investors holding QSBS for more than five years may exclude up to 100% of capital gains from federal taxes if they meet specific requirements, such as acquiring shares directly from a qualified C corporation with assets under $50 million. This provision incentivizes investment in small businesses and startups.
Filing Status Considerations
Capital gains taxes depend on income and filing status. Tax brackets differ for single filers, married couples, and heads of household, affecting overall liability.
The marriage penalty can push dual-income couples into higher brackets more quickly than if they were taxed individually. This is particularly relevant when both spouses have substantial investment income.
Head of household filers benefit from a more favorable bracket structure than single filers. This status applies to unmarried taxpayers who provide more than half the financial support for a dependent, such as a child or elderly parent. Higher income thresholds allow more room to realize gains at lower rates.