The IRS has announced significant increases to capital gains tax brackets for the tax year 2026. The new taxable income limits will apply to long-term capital gains, which are associated with assets owned for over one year. This adjustment also impacts other tax provisions, including federal income tax brackets and estate, gift tax exemptions, and eligibility for the earned income tax credit.
Key Changes to Capital Gains Tax for 2026
On Thursday, the IRS revealed that the long-term capital gains brackets would be adjusted to reflect higher income thresholds. This change comes amid broader tax updates aimed at accommodating inflation and altering financial conditions.
Updated Tax Brackets
- For single filers: The 0% long-term capital gains rate applies to taxable income of $49,450 or less.
- For married couples filing jointly: The threshold for the same rate is set at $98,900 or less.
Standard Deductions
Additionally, standard deductions will see an increase in 2026. The new amounts are:
- $16,100 for single filers
- $32,200 for married couples filing jointly
The IRS’s announcement occurred just a day after the agency reported it would furlough nearly half of its workforce due to a government shutdown. This raise in tax limits signifies an important change for many taxpayers planning for the years ahead.
Understanding these new brackets and standard deductions is crucial for effective financial planning. As taxpayers prepare for their 2026 filings, awareness of these adjustments will help in calculating capital gains taxes accurately.
