Is capital gains tax 15% or 20%?
The answer is both. A specific portion of long-term profits lands in the 15% bracket. However, if the taxable income is higher, a part of the profit might bump up into the 20% bracket.
What are the 2025 federal long-term capital gains brackets?
For the 2025 tax year — which is filed in 2026 — the IRS applies 0%, 15% and 20% to long-term gains. The bracket varies with the total income level & the filing status.
When is capital gains tax 15%?
The 15% is paid rate when the total taxable income falls squarely within the middle income tier for that filing status.
When does the 20% capital gains rate apply?
The 20% rate is active for the specific portion of long-term profit that pushes past the upper limit of the 15% bracket.
Can the total be higher than 20%?
Yes. Specific taxpayers end up paying more because additional tax rules stack on top of the standard long-term rates:
- 3.8% Net Investment Income Tax (NIIT) — this extra tax applies if the modified adjusted gross income (MAGI) crosses $200,000 (single or head of household), $250,000 (married filing jointly), or $125,000 (married filing separately)
- Alternative maximum rates — profits from selling collectibles or specific small business stock (Section 1202) face tax rates up to 28% — meanwhile, unrecaptured Section 1250 gain — which involves depreciation on specific real estate — carries a maximum rate of 25%
Does a short-term sale use 15% or 20%?
No. In the case of holding an asset for 1 year or less, the profit is taxed at the standard income tax rate, skipping the 0%, 15% or 20% long-term structure entirely.
Does Washington have its own capital gains tax too?
Yes. Washington applies a distinct excise tax on specific long-term profits. For 2025, the rate is 7% on amounts up to $1 million, and 9.9% for anything above that limit, following a $278,000 standard deduction. Real estate sales do not fall under this tax.
How do you figure out which rate applies to your sale?
Taxpayers may find the exact rate by checking how long they held the asset, their total taxable income and a handful of additional rules demonstrated below:
- Verifying if the sale counts as short-term or long-term
- Calculating the taxable income after all deductions — this matches the bracket table logic
- Fitting the long-term profit into the 0%, 15% or 20% tier parallel to the filing status
- Looking out for extra federal taxes or special-rate rules
Helium Day Tax & CPAs offers capital gains tax services
Planning to sell investments, an establishment or a major asset? Reach out to our team today. We are ready to verify the exact federal rate and manage the necessary state reporting.