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The IRS has announced capital gains tax increases for 2027.
In an announcement Thursday, the agency increased the taxable income limit for the long-term capital gains tier, which applies to assets held for more than a year.
It also increased the numbers for dozens of other provisions, including federal income tax brackets, inheritance and gift tax exemptions, and eligibility for the earned income tax credit, among other things.
Despite the post-election stock market volatility, many long-term investors hold profitable assets after years of market growth.
The new capital gains limits could affect investors’ plans for selling or rebalancing in 2027, and could trigger taxes on investments in brokerage accounts.
How the capital gains bracket works
The capital gains rate you pay (0%, 15%, or 20%) depends on which bracket you fall into based on your taxable income.
Calculate your taxable income by subtracting the greater of your standard deduction or itemized deductions from your adjusted gross income.
In 2027, the standard deduction increases from $16,100 to $16,600 for single filers and from $32,200 to $33,200 for married couples filing jointly.
Starting in 2027, single filers with taxable income of $51,050 or less and married couples filing jointly with taxable income of $102,100 or less will be eligible for 0% long-term capital gains.
