Married couples filing jointly will owe zero federal tax on long-term capital gains in 2026 if their taxable income stays below $98,900, according to inflation-adjusted thresholds the IRS published through Revenue Procedure 2025-32. The new figure, which applies to assets held longer than one year, creates a concrete planning window for households that can time the sale of appreciated stocks, mutual funds, or real estate before their income crosses the line.
How the $98,900 zero-rate threshold changes the math for 2026 filers
The federal tax code taxes long-term capital gains at three rates: 0%, 15%, and 20%. Which rate applies depends on a filer’s total taxable income and filing status, as outlined in IRS guidance. For married couples filing jointly, the 0% rate covers all net capital gain that fits within the taxable-income ceiling set each year by the IRS. In 2026, that ceiling is $98,900, as specified in the 2025-45 bulletin.
The distinction matters because taxable income is calculated after the standard deduction. A married couple claiming the standard deduction can earn considerably more in gross wages or retirement income and still land below the $98,900 line once that deduction is subtracted. The gap between gross income and taxable income is where the real planning opportunity sits. A household whose wages, pensions, and other ordinary income leave room under the cap can fill the remaining space with long-term gains at a 0% federal rate rather than the 15% rate that kicks in above it.
That 15-percentage-point difference on even a modest gain is significant. On $20,000 of long-term profit from a stock sale, the spread between 0% and 15% is $3,000 in federal tax. For couples whose income fluctuates from year to year, or who are transitioning into retirement, 2026 offers a defined target to measure against. In a year when one spouse takes time away from work, a business experiences a downturn, or required minimum distributions have not yet begun, the household may find itself temporarily under the threshold and able to harvest gains at no federal cost.
Revenue Procedure 2025-32 and the statutory framework behind the rate
The 0%/15%/20% structure is not a temporary provision or a policy experiment. It is written into 26 U.S.C. Section 1(h), which sets maximum capital gains rates and directs the IRS to adjust the income thresholds annually for inflation. Revenue Procedure 2025-32, released through the IRS newsroom alongside broader 2026 tax-year adjustments, carries out that annual recalibration by updating where each rate band begins and ends for every filing status.
The IRS confirmed in its plain-language guidance that “some or all” net capital gain may be taxed at 0% depending on taxable income. That phrasing, used in Topic 409, is intentionally broad because the zero-rate benefit is not all-or-nothing. A married couple whose taxable income lands at $110,000, for example, would pay 0% on the portion of gain that falls within the $98,900 window and 15% only on the excess. The threshold functions as a ceiling for the zero-rate band, not a cliff that instantly converts every dollar of gain to the higher rate once crossed.
This structure also means that ordinary income and capital gains interact. Ordinary income fills the brackets first, pushing gains higher up the schedule. A couple with $80,000 of taxable ordinary income would have only $18,900 of room left in the 0% band. If they realized $30,000 of long-term gain, $18,900 would be taxed at 0% and the remaining $11,100 at 15%. Understanding that stacking order is central to using the 2026 thresholds effectively.
Planning strategies for couples near the 2026 threshold
The $98,900 ceiling gives married joint filers a clear benchmark for year-end tax planning. Couples who expect taxable income just under the line may deliberately realize additional long-term gains before December 31, knowing those profits will be sheltered by the 0% rate. This can be especially attractive for investors who want to diversify a concentrated position, trim oversized holdings, or reset the cost basis on long-held shares.
Retirees have particular flexibility. In years when they have not yet started Social Security, or before larger retirement account withdrawals begin, their taxable income may temporarily dip, opening a window to recognize gains at 0%. Coordinating the timing of pension income, part-time work, and portfolio withdrawals can help keep total taxable income within the favorable band.
At the same time, couples need to watch how other decisions affect taxable income. Converting traditional IRA balances to Roth accounts, exercising stock options, or taking large bonuses can all push income above the 0% ceiling and into the 15% range. Because the zero-rate applies only up to the threshold, even a small overshoot changes the marginal cost of additional gains.
State taxes are another consideration. Many states tax long-term gains as ordinary income, so a 0% federal rate does not guarantee a tax-free sale overall. Still, avoiding federal capital gains tax while paying only state-level levies can substantially reduce the total burden on a planned transaction.
For households with volatile earnings, the inflation-adjusted 2026 threshold underscores the value of multi-year planning. Projecting income across several tax years, rather than looking at each in isolation, can reveal when it makes sense to accelerate or defer gains. With the $98,900 figure now set, married couples filing jointly have a specific target to model against as they decide when to sell appreciated assets and how aggressively to manage their taxable income.
David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
