Capital Gains Tax Rates in Retirement (2026): How Your RMDs Determine the Rate You Pay

Long-term capital gains are taxed at 0%, 15%, or 20% — but which rate applies to your gains depends entirely on your total income in that year. The IRS stacks capital gains on top of ordinary income (RMDs, Social Security, pensions). If your ordinary income already fills the lower brackets, your gains get pushed into the 15% or 20% tier. The interactive calculator below shows your exact exposure and how much 0% headroom you have left.

2026 Long-Term Capital Gains Tax Brackets

Source: IRS Revenue Procedure 2025-32. Thresholds are for total taxable income, not just capital gains income — ordinary income fills the brackets from the bottom.

The Stacking Rule: Why Your RMD Changes Your Capital Gains Rate

The IRS does not calculate your capital gains tax in isolation. Capital gains sit on top of your ordinary income inside the tax brackets. Here is how it works:

1. Your RMDs, taxable Social Security, pension income, and other ordinary income fill the brackets starting at $0.
2. Your long-term capital gains are stacked above that ordinary income.
3. The LTCG rate that applies to each dollar of gains depends on where that dollar falls in the total taxable income picture.

The pre-RMD window — the years between retirement and RMD age (73 or 75) — is often the lowest-tax period of a retiree's financial life. Many retirees have income low enough to qualify for the 0% capital gains rate and don't realize it. This is also why the same window is ideal for Roth conversions: the same low-income conditions that create 0% LTCG headroom also reduce Roth conversion costs.

Net Investment Income Tax (NIIT): The 3.8% Overlay

Above certain income levels, capital gains also trigger the 3.8% Net Investment Income Tax (NIIT) under IRC §1411. Unlike the capital gains rate brackets, the NIIT threshold is not inflation-adjusted:

The NIIT is 3.8% on the lesser of (1) your net investment income or (2) the amount by which your MAGI exceeds the threshold. It applies in addition to the 15% or 20% LTCG rate — for income above the 20% threshold, the combined federal rate on long-term gains can reach 23.8%.

Critically, NIIT can apply even if your capital gains qualify for the 0% LTCG rate. If your MAGI exceeds $200,000 (single) or $250,000 (MFJ), you owe 3.8% NIIT on capital gains regardless of which LTCG bracket you're in.

Capital Gains Tax Rate Calculator — 2026

Enter your expected 2026 income components. The calculator shows your LTCG rate, available 0% headroom, and NIIT exposure.

Five Strategies to Reduce Capital Gains Taxes in Retirement

1. Tax-Gain Harvesting in the Pre-RMD Window

Before you turn 73 (or 75 if born 1960+), your income is often low enough to qualify for the 0% LTCG rate. Deliberately selling appreciated investments in these years — a strategy called tax-gain harvesting — resets your cost basis to the current price. This reduces future capital gains if you sell again later (when RMDs may push you into the 15% bracket).

The math: if you sell $50,000 in appreciated stock at 0%, your basis resets to the current price. When you sell those shares again at 76 during active RMDs, the gain is measured from the higher reset basis — reducing or eliminating the taxable amount.

2. Roth Conversions Reduce Both RMDs and LTCG Rate

Every dollar you convert from traditional IRA to Roth before RMD age is a dollar not subject to a forced RMD at 73+. Smaller future RMDs mean lower future ordinary income, which preserves more 0% LTCG headroom. The pre-RMD window accomplishes both goals simultaneously: low-cost Roth conversions and zero-tax capital gains harvesting. See the Roth conversion sizing calculator for exact bracket-filling math.

3. QCDs Reduce AGI — Including Below the NIIT Threshold

If you're 70½ or older, Qualified Charitable Distributions (QCDs) reduce your AGI dollar-for-dollar — not just taxable income. Reducing AGI has three LTCG-specific benefits: (1) lowers ordinary taxable income, preserving 0% headroom; (2) may bring MAGI below the $200K/$250K NIIT threshold; (3) reduces the OBBBA phaseout calculation, partially restoring the $6,000 senior deduction. See the QCD calculator.

4. IRMAA and LTCG Interact at the Same Income Level

Capital gains also count as MAGI for IRMAA purposes — raising your Medicare premiums two years out. A $30,000 gain realized in 2026 adds to your 2026 MAGI, which determines your 2028 IRMAA tier. If your income already approaches an IRMAA threshold, a large capital gain can add $1,000–$5,000 in annual Medicare surcharges on top of the capital gains tax. See the IRMAA calculator for the full interaction.

5. Asset Location: Keep High-Turnover Assets Out of Taxable Accounts

If you hold both a traditional IRA and a taxable brokerage account, consider the LTCG implications when deciding what to own where. Assets you plan to sell and rebuy frequently (creating short-term gains taxed as ordinary income) belong in the IRA, where gains are tax-deferred. Assets you hold long-term for eventual sale — especially those you might sell at the 0% rate — can be kept in taxable accounts where preferential LTCG rates apply. This interacts with RMD withdrawal sequencing. See asset location in retirement for the full framework.

Inherited Securities: The Step-Up in Basis Advantage

Inherited stocks and funds receive a stepped-up cost basis to the fair-market value on the date of death (or alternate valuation date). This eliminates all unrealized gains that accumulated during the decedent's lifetime. From a capital gains planning standpoint, this creates a counterintuitive strategy: it may be better to pass highly appreciated taxable securities to heirs (who inherit at zero gain) and spend down the traditional IRA yourself (paying ordinary income tax now but avoiding worse tax consequences for heirs under the SECURE Act 10-year rule). See IRA estate planning for the full comparison.