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Capital Gains and Your Tax Rate

2026 brackets and bands · reviewed October 28, 2026

Shows the tax rate on your next dollar of gain and on your next dollar of ordinary income, and which one pushes the other. About

In plain words. When you sell an investment for a profit, the gain is taxed at its own rates, and people are never sure whether it also raises the tax on their wages or pension. It does not: ordinary income is taxed first as if the gain were not there, and the gain sits on top and is taxed by where it lands. This tool draws both, your ordinary income against its brackets and the gain stacked above it against the gains bands, and tells you the rate on the next dollar of each. It also shows the one way a gain does reach back, through Social Security.

Why it matters. Knowing which income pushes which decides whether to take a gain this year or next, and how much. The rate on the next dollar is the number that decision turns on, and it is often not the bracket you think you are in.

An example. A single person with $60,000 of ordinary income and a $20,000 gain pays about $2,168 on the gain. The next dollar of gain is taxed at 15 percent. The next dollar of wages is taxed at 27 percent, not 12, because it pushes a dollar of the gain up a band.

Where it stops. It assumes the standard deduction and leaves out itemized deductions, the child tax credit, whose phase-out can make a gain cost a little more for a family with children at home, collectibles and depreciation recapture, the alternative minimum tax, and loss carryforwards. Everything it leaves out (opens in a new window).

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Wages, pensions, IRA withdrawals, and interest, before any deduction. Leave out the gain, dividends, and Social Security; each has its own box.

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Box 1b of a 1099-DIV. They are taxed like long-term gains and use up the 0% band first.

Filing status
How long you held the investment

More than a year is a long-term gain with its own rates. A year or less is taxed as ordinary income.

The profit on the sale: what you sell for, less what you paid.

Gross, before the Medicare premium is taken out. Leave at zero if you are not drawing yet.

Are you 65 or older?

Age adds to the standard deduction and brings the senior deduction, which a gain can shrink.

Illinois resident

Illinois taxes a gain at its flat 4.95%, the same as a wage. It does not tax Social Security or retirement account withdrawals.

Tax rate on the next dollar of gain
19.95%
It lands in the 15% band, plus Illinois at 4.95%. Your ordinary income is taxed at 27% on its next dollar, and the gain did not change the tax on it. That is more than the 12% bracket because each extra dollar of ordinary income also pushes a dollar of your gain into a higher band.

Your ordinary income, taxed by the brackets. The gain does not appear on this bar.

Federal income tax brackets for a single filer in 2026, filled to your taxable ordinary incomeA horizontal bar of the 2026 ordinary brackets up to $120k. Taxable ordinary income without the gain fills $43,900, and the gain does not change it.10%12%22%24%

The gain, stacked on top of your ordinary income and taxed by where it lands.

Capital gains rate bands for a single filer in 2026, with your ordinary income below and the gain on top, on the same scale as the brackets aboveA horizontal bar of the 0, 15, and 20 percent bands up to $120k. Your taxable ordinary income occupies the first $43,900; the long-term gain and dividends add $20,000 on top. Dashed marks show where the 3.8% surtax and the first Medicare premium tier begin.0%15%Medicare tier $93k
Federal tax the gain adds
$2,168
$5,550 at 0%, $14,450 at 15%
Illinois tax on the gain
$990
4.95% of the gain, the same rate as a wage
Federal tax on everything else
$5,020
The same with or without the gain

Ordinary income is taxed first, by the brackets on the top bar, as if the gain did not exist. A long-term gain is stacked on top and taxed by where it lands on the bottom bar: 0% up to $49,450 of taxable income for a single filer, 15% up to $545,500, and 20% above that. So more ordinary income pushes a gain into a higher band, and a gain never pushes ordinary income into a higher bracket. The exception runs through adjusted gross income, which the gain joins in full. It can make more of a Social Security benefit taxable, shrink the senior deduction, and set a higher Medicare premium two years later. The 3.8% surtax on investment income begins at $200,000 of income for a single filer, a line that is never adjusted for inflation.

This uses the 2026 federal brackets and capital gains bands, the standard deduction with its age additions, the senior deduction and its phase-out, the taxation of Social Security benefits, the 3.8% surtax on investment income, the Medicare premium tiers, and Illinois's flat rate. It reads each rate by adding $1,000 to that income and watching the tax. It leaves out itemized deductions, the child tax credit, whose phase-out can make a gain cost a little more for a family with children at home, collectibles and depreciation recapture, the alternative minimum tax, and loss carryforwards. Educational, not advice.

This is a simplified model, not your actual tax return or plan. It only knows what you type in, leaves out rules that may apply to you, and cannot weigh the other facts and trade-offs a real decision depends on. Before you act, talk with a professional who knows your whole situation.

Educational only, not investment, tax, or legal advice. Results are hypothetical estimates that vary with each use and over time and are not guaranteed accurate or complete. Using this tool creates no client relationship with Considerate Capital, and the site that linked here is not affiliated with it. By using it you agree to the tool terms (opens in a new window).