The short answer
For 2026 the 15% long-term capital gains bracket ends at $613,700 of taxable income for joint filers and $545,500 for single filers, the 0% band ends at $98,900 and $49,450, and the 3.8% net investment income tax still starts at $250,000 joint and $200,000 single because that threshold is never indexed. Depreciation claimed on a building is taxed at ordinary rates capped at 25%. The figures below come from Rev. Proc. 2025-32, the Code as amended by Public Law 119-21 and the 2026 Medicare notice; they feed every worked example on this site, and a 1031 exchange defers the capital gains, recapture and NIIT layers together.
At a glance
| 0% capital gains band ends | $98,900 joint, $49,450 single, $66,200 head of household, $3,300 estates and trusts |
|---|---|
| 15% band ends, 20% starts | $613,700 joint, $545,500 single, $579,600 head of household, $16,250 estates and trusts |
| Unrecaptured section 1250 gain | Ordinary rates, capped at 25% |
| Net investment income tax | 3.8% above $250,000 joint, $200,000 single, $125,000 married separate; not indexed |
| Standard deduction | $32,200 joint, $16,100 single, $24,150 head of household; $1,650 more per spouse aged 65 or blind |
| Estate and gift | $15,000,000 basic exclusion; $19,000 annual gift exclusion |
| SALT cap | $40,400, reduced by 30% of MAGI over $505,000 but never below $10,000; rental property taxes sit outside it |
| Medicare IRMAA first tier | MAGI over $218,000 joint or $109,000 single lifts the Part B premium from $202.90 to $284.10 a month |
Capital gains on a 2026 sale fall into three bands, and the sale itself decides which band you land in
Section 1(h) taxes net capital gain at 0%, 15% or 20%, and the band is set by your total taxable income with the gain stacked on top of wages, rents and everything else. Rev. Proc. 2025-32 section 3.03 sets the 2026 breakpoints: the 0% band ends at $98,900 for joint filers, $49,450 for single and married-separate filers, $66,200 for heads of household and $3,300 for estates and trusts; the 15% band ends at $613,700, $545,500, $306,850, $579,600 and $16,250 respectively. Everything above is 20%.
The depreciation you claimed on a rental building comes back as unrecaptured section 1250 gain, which section 1(h)(1)(E) taxes at 25% as a ceiling, not a flat rate; it is taxed at your ordinary bracket when that is lower. The 3.8% net investment income tax under section 1411 applies to the lesser of net investment income or modified AGI over $250,000 joint, $200,000 single or $125,000 married separate, and those figures have never been indexed. The capital gains tax on rental property page shows how the layers stack.
Ordinary brackets set the rate on the depreciation layer and on any dealer or short-term gain
Public Law 119-21 section 70101 made the seven rates permanent. For 2026 the joint brackets are 10% to $24,800, 12% to $100,800, 22% to $211,400, 24% to $403,550, 32% to $512,450, 35% to $768,700 and 37% above that. Single filers: 10% to $12,400, 12% to $50,400, 22% to $105,700, 24% to $201,775, 32% to $256,225, 35% to $640,600, then 37%. Estates and trusts hit 37% at $16,000.
The standard deduction is $32,200 joint, $16,100 single and $24,150 head of household, plus $1,650 for each spouse who is 65 or blind ($2,050 if unmarried). Section 151(d)(5) adds a $6,000 deduction per person aged 65 or older for 2025 through 2028, reduced by 6% of MAGI above $75,000 single or $150,000 joint, so a sale year usually wipes it out. The AMT exemption is $140,200 joint and $90,100 single, phasing out above $1,000,000 and $500,000 of alternative minimum taxable income.
Estate, gift and Medicare thresholds decide whether holding, gifting or selling is cheaper
Section 2010(c)(3) sets the basic exclusion at $15,000,000 for 2026, indexed from 2027, and the generation-skipping exemption matches it. The annual gift exclusion is $19,000 per recipient. Because section 1014 resets basis at death, an owner under the exclusion who holds appreciated property passes it on with no income tax on the deferred gain; 1031 versus holding for step-up works through that choice.
A sale also moves Medicare premiums. The CMS 2026 notice sets the standard Part B premium at $202.90 and adds an income-related amount once MAGI on a prior-year return passes the first tier, so a 2026 gain surfaces in a later year's premium.
- Up to $109,000 single / $218,000 joint: $202.90 a month.
- To $137,000 / $274,000: $284.10. To $171,000 / $342,000: $405.80.
- To $205,000 / $410,000: $527.50. Under $500,000 / $750,000: $649.20.
- $500,000 / $750,000 and above: $689.90, plus a Part D surcharge of up to $91.00.
Business-side limits for 2026: QBI, section 179, the SALT cap, bonus depreciation and the loss cap
The 20% qualified business income deduction is now permanent under section 199A; the 2026 threshold is $403,500 of taxable income joint and $201,750 for other filers, with the wage and property limits phasing in over the next $150,000 and $75,000. A $400 minimum deduction applies from 2026 when active QBI is at least $1,000. The QBI deduction for landlords page covers the safe harbor.
Section 179 expensing is capped at $2,560,000 for 2026, phasing out dollar for dollar above $4,090,000 of purchases. Bonus depreciation is 100% for qualified property acquired after January 19, 2025 under the Form 4562 instructions. The excess business loss limit under section 461(l) is $256,000, or $512,000 joint, with disallowed losses carried forward as net operating losses.
The itemized deduction for state and local taxes is capped at $40,400 by section 164(b)(6), falling by 30% of MAGI over $505,000 to a $10,000 floor; property taxes on a rental are outside the cap, as the SALT cap page explains. From 2026, section 68 trims itemized deductions by 2/37 of the amount by which taxable income exceeds the 37% bracket threshold.
What stays the same in 2026, and which numbers an exchange takes off the table
Section 1031 was not amended in 2025: real property only, 45 days to identify, 180 days to close, and gain deferred into the replacement property's basis. The section 121 home-sale exclusion stays at $250,000 and $500,000. Opportunity zone investments made after December 31, 2026 get a rolling five-year deferral under section 1400Z-2, while earlier investments recognize their deferred gain on December 31, 2026.
Gain that section 1031 keeps out of taxable income is also kept out of net investment income under the Form 8960 instructions, out of MAGI for the SALT phase-down and the IRMAA tiers, and out of the taxable income that pushes rents toward the 20% band. That is why the exchange decision is usually made against this whole table rather than the 15% headline rate; the eligibility rules and traditional DST solutions pages take it from there.
Related questions
Are the 0%, 15% and 20% breakpoints measured against gross income or taxable income?
Taxable income, after the standard or itemized deduction, and the gain itself is part of it. A couple with $100,000 of other taxable income and a $600,000 gain has $700,000 of taxable income, so the top $86,300 of the gain is taxed at 20% in 2026.
Is depreciation always taxed at 25%?
No. Section 1(h)(1)(E) makes 25% a ceiling on unrecaptured section 1250 gain; the layer is taxed at your ordinary bracket when that is lower. How much depreciation recapture when you sell a rental shows the arithmetic.
Does the NIIT threshold rise with inflation?
No. Section 1411(b) fixes $250,000 joint and $200,000 single with no adjustment, so more sellers cross it every year. NIIT on a rental sale covers what an exchange does to it.
Will a 2026 sale raise my Medicare premiums?
If your MAGI including the gain crosses a tier, yes, for one premium year; the 2026 tiers start at $109,000 single and $218,000 joint and the top tier adds $487.00 a month to Part B. Deferred exchange gain never enters MAGI.
Which of these numbers does a 1031 exchange change?
None of the thresholds move, but the deferred gain is removed from taxable income and MAGI, so the capital gains band, NIIT, SALT phase-down, IRMAA tier and senior deduction are all computed without it. Boot you receive is still counted; see what boot is.
Sources
Checked against these publications on September 30, 2026. Rules and figures change; confirm the current version with your CPA or attorney before you act. This page is general information, not tax or legal advice.
- Rev. Proc. 2025-32, 2026 inflation-adjusted items
- IRS, tax inflation adjustments for tax year 2026
- IRC section 1, tax imposed (1(h) and 1(j))
- IRC section 1411, net investment income tax
- Instructions for Form 8960
- IRC section 164, state and local taxes
- IRC section 199A, qualified business income
- IRC section 2010, unified credit
- IRC section 151, senior deduction
- IRC section 68, limitation on itemized deductions
- IRC section 461, excess business losses
- IRC section 1031, like-kind exchanges
- IRC section 1400Z-2, opportunity zone deferral
- Instructions for Form 4562 (2025)
- CMS, 2026 Medicare Parts A and B premiums and deductibles
- Public Law 119-21 (July 4, 2025)