2017 Capital Gains Tax Rate
For 2017, the Capital Gains Tax Rate figures are 15% (Rate above the 0% bracket) and 20% (Rate above the 15% bracket).
Effective 2017-01-01Source: Publication 550 (2017), Investment Income and Expenses (IRS)Verified 2026-09-02
Compared with 2016
Every figure on this page is unchanged from 2016.
| Item | 2016 | 2017 | Change |
|---|---|---|---|
| Rate above the 0% bracket | 15% | 15% | +0% (+0.0%) |
| Rate above the 15% bracket | 20% | 20% | +0% (+0.0%) |
Who it applies to
Individuals with a net capital gain from selling investment property held for more than a year, and taxpayers reporting qualified dividends, which the same rates apply to.
What changed this year, and why
For 2017 the rate on a net capital gain is set by the ordinary income tax rate that would otherwise apply to the same income. Where that ordinary rate sits in the middle of the schedule the gain is taxed at 15%, and where it sits at the top of the schedule the gain is taxed at 20%. Publication 550 states no dollar breakpoints of its own for these bands, because before the Tax Cuts and Jobs Act the bands were bounded by the ordinary brackets rather than by amounts of their own.
Common questions
- What was the long-term capital gains rate for 2017?
- It depended on the ordinary income tax rate that would otherwise have applied to the same income. Publication 550's own table gives 15% where that ordinary rate is in the middle of the schedule and 20% where it is at the top of it.
- Why does this page show no dollar thresholds for 2017?
- Before the Tax Cuts and Jobs Act the capital gain bands had no dollar breakpoints of their own. They were bounded by the ordinary income brackets, so there is no separate amount for the IRS to state, and this site publishes no figure a document does not state.
- Do these rates apply to a gain on something held for less than a year?
- No. A short-term capital gain is taxed as ordinary income at the taxpayer's own bracket rate. Only a net long-term capital gain gets the rates on this page.
What the lower rates actually apply to
The IRS applies lower tax rates to a taxpayer's net capital gain for 2017, rather than the ordinary income rates. A net capital gain is the amount by which net long-term capital gain for the year exceeds net short-term capital loss. For 2017, the maximum capital gain rates are 0%, 15%, 20%, 25%, and 28%, depending on the type of gain and the taxpayer's taxable income. The 0%, 15%, and 20% rates apply to most capital gains and qualified dividends. If the regular tax computation produces a lower tax than the capital gain rate computation, the regular rates apply instead.
For 2017, the maximum capital gain rates are 0%, 15%, 20%, 25%, and 28%.
Publication 550 (2017), Investment Income and Expenses (IRS)
How long you must hold to get the long-term rate
Under IRS rules, the holding period determines whether a capital gain or loss on investment property is short-term or long-term, which in turn decides whether the gain qualifies for the lower capital gain rates. You hold investment property more than 1 year for long-term treatment if your holding period exceeds 1 year. If you hold the property 1 year or less, the result is a short-term capital gain or loss taxed at ordinary rates. You begin counting the day after the date you acquired the property, and the day you disposed of the property counts as part of the holding period. For securities traded on an established market, the holding period starts the day after the trade date of the purchase and ends on the trade date of the sale.
Long-term or short-term. If you hold invest- ment property more than 1 year, any capital gain or loss is a long-term capital gain or loss. If you hold the property 1 year or less, any capital gain or loss is a short-term capital gain or loss.
Publication 550 (2017), Investment Income and Expenses (IRS)
How much of a loss you can deduct in one year
The IRS limits how much of a net capital loss a taxpayer can deduct against ordinary income in a single year. For 2017, the allowable capital loss deduction is the lesser of $3,000 ($1,500 if married and filing a separate return) or the total net loss shown on line 16 of Schedule D (Form 1040). A taxpayer can use the total net loss to reduce ordinary income dollar for dollar, but only up to that $3,000 cap for the year. Any unused loss beyond the annual limit carries over to the next tax year and continues carrying forward until it is fully used. The carried-over loss retains its character as long-term or short-term.
Limit on deduction. Your allowable capital loss deduction, figured on Schedule D (Form 1040), is the lesser of: $3,000 ($1,500 if you are married and file a separate return), or Your total net loss as shown on line 16 of Schedule D (Form 1040).
Publication 550 (2017), Investment Income and Expenses (IRS)
The loss you cannot deduct if you buy back in
IRS wash sale rules prevent taxpayers from claiming a tax deduction for a loss when they repurchase the same or substantially identical stock or securities within a short window. Specifically, a wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you buy substantially identical stock or securities, acquire them in a fully taxable trade, acquire a contract or option to buy them, or acquire substantially identical stock for an individual retirement account (IRA) or Roth IRA. If the loss is disallowed under the wash sale rules, the disallowed amount is added to the cost basis of the replacement stock or securities, which postpones the loss deduction until the disposition of the new position. The holding period of the new stock or securities also includes the holding period of the stock or securities sold.
A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you: 1. Buy substantially identical stock or securi- ties, 2. Acquire substantially identical stock or se- curities in a fully taxable trade, 3. Acquire a contract or option to buy sub- stantially identical stock or securities, or 4. Acquire substantially identical stock for your individual retirement account (IRA) or Roth IRA.
Publication 550 (2017), Investment Income and Expenses (IRS)
The extra tax on top of the capital gain rate
The federal Net Investment Income Tax (NIIT) is a 3.8% tax that applies on top of the regular capital gains tax. If you have investment income, including capital gains, you may owe this tax if your modified adjusted gross income exceeds certain thresholds based on your filing status. The tax is calculated on the lesser of your net investment income or the amount by which your modified adjusted gross income exceeds the threshold. This means the NIIT is an additional layer of tax that sits above the 15% or 20% capital gains rates that apply to your net capital gains, potentially increasing your effective tax rate on investment income.
Net investment income tax (NIIT). You may be subject to the NIIT. The NIIT is a 3.8% tax on the lesser of your net investment income or the
Publication 550 (2017), Investment Income and Expenses (IRS)
Certain hedges force you to recognize the gain before you actually sell
Under federal tax rules, you are treated as having made a constructive sale of an appreciated financial position when you enter into certain offsetting transactions - such as a short sale of the same or substantially identical property, an offsetting notional principal contract, or a futures or forward contract to deliver the same property. The effect is that you must recognize gain as if you had disposed of the position at its fair market value on the date of the constructive sale, even though you have not actually sold it. This also gives you a new holding period for the position starting on the date of the constructive sale. When you later close the transaction, you reduce your gain (or increase your loss) by the gain already recognized on the constructive sale. The rule prevents taxpayers from using hedges to lock in gain without triggering tax, by forcing the gain to be recognized at the time the hedge is put in place.
You are treated as having made a constructive sale of an appreciated fi- nancial position if you: Enter into a short sale of the same or sub- stantially identical property, Enter into an offsetting notional principal contract relating to the same or substan- tially identical property, Enter into a futures or forward contract to deliver the same or substantially identical property (including a forward contract that provides for cash settlement), or Acquire the same or substantially identical property (if the appreciated financial posi- tion is a short sale, an offsetting notional principal contract, or a futures or forward contract).
Publication 550 (2017), Investment Income and Expenses (IRS)
There is no flat-rate line - a worksheet blends the rates against your income
For federal capital gains, there is no single flat-rate line on the return where you simply apply a percentage to your net capital gain. Instead, you must figure your tax using a worksheet that blends the maximum capital gain rates against your taxable income. The IRS provides a specific worksheet titled "Tax computation using maximum capital gain rates" in the Schedule D instructions. This worksheet takes into account the income thresholds where each rate bracket begins and ends, ensuring that your net capital gain is taxed at the appropriate rate based on your total income for the year. Because the brackets for each rate are based on your taxable income as a whole, the worksheet has to account for how much of each bracket is left after your ordinary income is taxed. If the regular tax computation results in a lower tax than the maximum capital gain rate computation, the regular computation applies instead.
If you figure your tax using the maxi- mum capital gain rate and the regular tax computation results in a lower tax, the regular tax computation applies.
Publication 550 (2017), Investment Income and Expenses (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Publication 550 (2017), Investment Income and Expenses (IRS)
- Rate above the 0% bracket
other gain1 and the regular tax rate that would apply is 25%, 28%, 33%, or 35% 15%
- Rate above the 15% bracket
other gain1 and the regular tax rate that would apply is 39.6% 20%