Short Answer
Net long-term capital gains and qualified dividends are taxed at 0 percent, 15 percent, or 20 percent, not at ordinary rates. The IRS worksheet stacks your ordinary income first, then layers the gains on top: the part below the 0 percent breakpoint ($49,450 single / $98,900 MFJ in 2026) is taxed at 0 percent, the part up to the 15 percent breakpoint ($545,500 single / $613,700 MFJ) at 15 percent, and anything above at 20 percent. A separate 3.8 percent net investment income tax applies once modified AGI passes $200,000 single or $250,000 MFJ.
2026 and 2025 Long-Term Capital Gains Breakpoints
0% / 15% / 20% Maximum Rate Amounts by Filing Status (taxable income)
| Filing Status | 0% rate up to | 15% rate up to | 20% rate above |
|---|
| Single (2026) | $49,450 | $545,500 | $545,500 |
| Married Filing Jointly / QSS (2026) | $98,900 | $613,700 | $613,700 |
| Head of Household (2026) | $66,200 | $579,600 | $579,600 |
| Married Filing Separately (2026) | $49,450 | $306,850 | $306,850 |
| Single (2025) | $48,350 | $533,400 | $533,400 |
| Married Filing Jointly / QSS (2025) | $96,700 | $600,050 | $600,050 |
| Head of Household (2025) | $64,750 | $566,700 | $566,700 |
| Married Filing Separately (2025) | $48,350 | $300,000 | $300,000 |
The breakpoints are measured against total taxable income, with ordinary income counted first. The 3.8 percent net investment income tax thresholds (IRC §1411) are fixed and not inflation-adjusted: $200,000 single and head of household, $250,000 married filing jointly and qualifying surviving spouse, and $125,000 married filing separately. Sources: IRS Rev. Proc. 2025-32 (2026), Rev. Proc. 2024-40 (2025), and IRC §1(h), §1(j)(5), and §1411.
How the Calculation Works
The tool mirrors the IRS Qualified Dividends and Capital Gain Tax Worksheet that sits behind Form 1040 line 16. For the full line-by-line version, see the Qualified Dividends and Capital Gains Worksheet Guide.
Step 1: Separate Ordinary Income From Preferential Income Confirmed
Your qualified dividends plus net long-term capital gain are the preferential income, taxed at 0/15/20 percent. Subtracting them from total taxable income leaves the ordinary income (wages, interest, short-term gains, less deductions), which is taxed at the regular brackets. This is worksheet lines 1 through 7.
Step 2: Stack the Ordinary Income First Confirmed
The ordinary income is treated as filling the lowest tax space. The preferential income then sits on top of it. Where the gains land relative to the 0 percent and 15 percent breakpoints determines the rate, which is why two people with the same gain can pay very different rates.
Step 3: Apply the 0 Percent Band Confirmed
The portion of gains and qualified dividends that falls below the 0 percent breakpoint, after ordinary income is counted, is taxed at nothing. If ordinary income already exceeds the breakpoint, no gain reaches the 0 percent band.
Step 4: Apply the 15 Percent and 20 Percent Bands Confirmed
The gains between the 0 percent and 15 percent breakpoints are taxed at 15 percent, and any portion above the 15 percent breakpoint is taxed at 20 percent. The tool tracks the dollar amount landing in each band so a gain can be split across two rates.
Step 5: Add Ordinary Tax and the 3.8 Percent NIIT Confirmed
Tax on the ordinary income is computed from the 2025 or 2026 brackets and added to the preferential tax. The result is capped at the tax you would owe if everything were ordinary (the worksheet's final safeguard). The 3.8 percent net investment income tax is then added on the smaller of your net investment income or the amount your modified AGI exceeds the threshold.
Frequently Asked Questions
How are long-term capital gains and qualified dividends taxed?
Net long-term capital gains (on assets held more than one year) and qualified dividends are taxed at preferential federal rates of 0 percent, 15 percent, or 20 percent, instead of the ordinary income rates. Which rate applies depends on your total taxable income and filing status. The IRS uses the Qualified Dividends and Capital Gain Tax Worksheet to stack your ordinary income first and then apply the 0/15/20 percent brackets to the gains and dividends on top. A separate 3.8 percent net investment income tax can also apply to higher earners.
What are the 2026 capital gains tax brackets?
For tax year 2026 (Rev. Proc. 2025-32), the 0 percent rate applies to taxable income up to $49,450 single, $98,900 married filing jointly, $66,200 head of household, and $49,450 married filing separately. The 15 percent rate applies up to $545,500 single, $613,700 MFJ, $579,600 HOH, and $306,850 MFS. Above those amounts the rate is 20 percent. For tax year 2025, the 0 percent ceiling is $48,350 single and $96,700 MFJ, and the 15 percent ceiling is $533,400 single and $600,050 MFJ.
How does income stacking work on the capital gains worksheet?
The worksheet treats your ordinary income (wages, interest, short-term gains) as filling the lowest tax brackets first. Your long-term gains and qualified dividends then stack on top. The 0 percent rate only applies to the portion of gains that falls below the 0 percent breakpoint after ordinary income is counted, the 15 percent rate applies to the portion between the breakpoints, and the 20 percent rate applies to any portion above the 15 percent breakpoint. This is why a person with high wages pays 15 or 20 percent on the same gain that someone with low wages would pay 0 percent on.
Do qualified dividends count toward the capital gains brackets?
Yes. Qualified dividends are taxed at the same 0/15/20 percent rates as net long-term capital gains and are combined with them in the worksheet. A dividend is qualified if it is paid by a U.S. corporation or a qualifying foreign corporation and you meet the holding-period rule (generally more than 60 days within the 121-day window around the ex-dividend date). Ordinary (non-qualified) dividends do not get the preferential rate and are taxed as ordinary income.
What is the 3.8% net investment income tax?
The net investment income tax (NIIT) under IRC §1411 is an extra 3.8 percent tax on investment income, including capital gains and dividends, for taxpayers whose modified adjusted gross income exceeds $200,000 single or head of household, $250,000 married filing jointly, or $125,000 married filing separately. The tax is 3.8 percent of the smaller of your net investment income or the amount your MAGI exceeds the threshold. These thresholds are fixed by statute and are not indexed for inflation, so more taxpayers are pulled in each year.
What is the 0% capital gains rate and who qualifies?
The 0 percent long-term capital gains rate means some or all of your gains and qualified dividends are taxed at nothing. It applies when your total taxable income, including the gains, stays below the 0 percent breakpoint for your filing status ($49,450 single or $98,900 MFJ in 2026). Because the gains stack on top of ordinary income, a retiree or low-wage household can realize gains tax-free up to that ceiling. If only part of the gain fits under the breakpoint, that part is taxed at 0 percent and the rest moves into the 15 percent bracket.
Are short-term capital gains taxed at these rates?
No. Short-term capital gains, on assets held one year or less, are taxed as ordinary income at your regular bracket rate, not the 0/15/20 percent preferential rates. Only net long-term gains and qualified dividends get the lower rates. This calculator applies the preferential rates to the long-term gains and qualified dividends you enter and taxes the rest of your income at ordinary rates, so enter short-term gains as part of your ordinary taxable income, not as long-term gains.
Did the One Big Beautiful Bill Act change capital gains rates?
No. The One Big Beautiful Bill Act (P.L. 119-21) did not change the 0/15/20 percent long-term capital gains and qualified dividend rate structure or the 3.8 percent net investment income tax. The dollar breakpoints between the rates are still adjusted for inflation each year by the IRS revenue procedure, which is why the 2026 ceilings are slightly higher than 2025, but the rates themselves and the way the worksheet stacks income are unchanged.
Does this calculator compute my exact total tax?
It produces a close estimate of the federal income tax on a return whose only preferential income is the long-term gains and qualified dividends you enter, using the 2025 or 2026 ordinary brackets for the ordinary portion and the 0/15/20 percent worksheet logic for the gains, plus the 3.8 percent NIIT. It does not model the alternative minimum tax, the additional Medicare tax, credits, the qualified business income deduction, Section 1250 unrecaptured gain (taxed up to 25 percent), collectibles (up to 28 percent), or state tax. Use it to understand the rate on your gains, not as a substitute for full return preparation.