🎯 In 30 seconds: In a regular brokerage account you pay tax when you sell at a gain and when you receive dividends or interest. Holding more than one year usually cuts the rate on gains, often from 22% or more down to 15%, and sometimes to 0%. Losses can offset gains, but the wash-sale rule stops you from selling and buying straight back. None of this applies inside a 401(k), IRA or HSA while the money stays there.
Short-term vs long-term gains
Hold an investment one year or less and the gain is short-term, taxed at your ordinary income rate (10% up to 37% for 2026). Hold it more than one year and the gain is long-term, taxed at 0%, 15% or 20% depending on your taxable income.
2026 long-term capital gain rates, by total taxable income:
| Filing status | 0% up to | 15% up to | 20% above |
|---|---|---|---|
| Single | $49,450 | $545,500 | $545,500 |
| Married filing jointly | $98,900 | $613,700 | $613,700 |
| Head of household | $66,200 | $579,600 | $579,600 |
| Married filing separately | $49,450 | $306,850 | $306,850 |
Collectibles, such as coins, art and physical gold (including ETFs that hold the metal), are taxed at up to 28% on long-term gains.
Worked example
Jordan is single with $60,000 of taxable income from work in 2026 and sells shares for a $10,000 gain.
| Held 11 months (short-term) | Taxed at 22%: about $2,200 |
| Held 13 months (long-term) | Taxed at 15%: about $1,500 |
| Difference | About $700 for waiting two more months |
Now take Lee, single, with $30,000 of ordinary taxable income and the same $10,000 long-term gain. Total taxable income is $40,000, under $49,450, so the gain is taxed at 0%.
Dividends and the 3.8% surtax
Qualified dividends get the same 0/15/20% rates as long-term gains. To qualify you must have held the stock for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. Other dividends, and interest from bonds and savings, are taxed as ordinary income.
The Net Investment Income Tax adds 3.8% on investment income for people whose modified AGI is over $200,000 (single or head of household) or $250,000 (married filing jointly). It applies to the smaller of your net investment income or the amount you are over the threshold.
Losses, harvesting and the wash-sale rule
Losses first offset gains. If losses are bigger, up to $3,000 a year ($1,500 if married filing separately) can reduce ordinary income, and the rest carries forward to future years.
Tax-loss harvesting means selling an investment that is down to book the loss, then buying something similar but not the same so you stay invested.
Cost basis: what you paid
Your gain is the sale price minus your cost basis. If you bought shares at different times, which shares you sell matters. Unless you identify specific shares, the IRS treats the first shares you bought as the first sold (FIFO). Brokers report basis on Form 1099-B, and most let you choose a method, such as specific lots, before you sell. Reinvested dividends add to your basis, so keep them in the count or you will pay tax twice.
Tax rules have exceptions. For anything large or unusual, a tax professional or the IRS publications below are the place to check. For the bigger picture of which account holds what, see accounts and investing basics.