IRS sets higher long-term capital gains tax brackets for 2027

The IRS has announced increased long-term capital gains tax brackets for 2027.

In its announcement, the agency raised the taxable income thresholds used to determine the tax rate on assets held for more than one year.

It also adjusted a wide range of other tax provisions, including federal income tax brackets, the estate and gift tax exemption, and income limits for the earned income tax credit.

Even with stock market swings after the election, many long-term investors still hold gains accumulated over several years of market appreciation.

The updated capital gains brackets may affect investors' plans for sales or portfolio rebalancing, since those moves can trigger taxes in brokerage accounts.

Here are the long-term capital gains tax brackets for 2027:

• 0%: taxable income up to $51,050 ($102,100 for married couples filing jointly)
• 15%: taxable income up to $563,200 ($633,600 for married couples filing jointly)
• 20%: taxable income of $563,201 or more ($633,601 or more for married couples filing jointly)

The IRS's latest inflation adjustments for 2027 arrive as many Americans continue to struggle with the rising cost of housing, groceries, gasoline and other everyday expenses.

How the capital gains brackets work

The capital gains rate you owe — 0%, 15% or 20% — depends on the bracket tied to your taxable income.

Taxable income is calculated by subtracting either the standard deduction or itemized deductions, whichever is greater, from adjusted gross income.

For 2027, the standard deduction will increase to $16,600 for single filers, up from $16,100, and to $33,200 for married couples filing jointly, up from $32,200.

Single filers with taxable income of $51,050 or less, and married couples filing jointly with $102,100 or less, will qualify for the 0% long-term capital gains rate.