IRS Adjusts 2027 Long-Term Capital Gains Tax Brackets for Inflation

The IRS has announced the updated long-term capital gains tax brackets for the 2027 tax year under Rev. Proc. 2026-35. The rates of 0%, 15%, and 20% remain unchanged, but the income thresholds for each band were raised to adjust for inflation. The new limits apply to assets held longer than one year and sold between January 1 and December 31, 2027.

For single filers, the 0% tax rate applies to taxable income up to $51,050, while the 20% rate begins above $563,200. For married couples filing jointly, the 0% threshold reaches up to $102,100, with the 20% bracket starting past $633,600. Income that falls between these boundaries is taxed at the 15% rate, and qualified dividends follow the same bracket structure.

The IRS calculates tax obligations by counting ordinary income first before layering on long-term capital gains and qualified dividends. Assets sold after being held for one year or less are treated as short-term gains and are taxed at standard income rates ranging from 10% to 37%.

Certain tax rules remain unadjusted for inflation. The 3.8% Net Investment Income Tax remains fixed at modified adjusted gross income limits of $200,000 for single filers and $250,000 for joint filers. Additionally, special maximum rates apply to specific long-term gains, including up to 25% on unrecaptured Section 1250 rental property gains and up to 28% on collectibles and qualified small business stock.