Texas Capital Gains Tax 2026

Federal long-term capital gains (assets held more than one year) are taxed at 0%, 15%, or 20% depending on taxable income, plus a 3.8% Net Investment Income Tax (NIIT) on investment income above $200k single / $250k MFJ. Short-term gains (held one year or less) are taxed at ordinary federal rates of 10% to 37%.

For 2026, the 0% bracket applies up to approximately $48,350 single / $96,700 MFJ of total taxable income, the 15% bracket runs to roughly $533,400 single / $600,050 MFJ, and the 20% rate applies above those thresholds.

Texas has no personal income tax, so there is no state-level tax on capital gains in 2026 (Washington is the notable carve-out — it taxes LTCG above $270k at 7%; verify your specific situation).

Capital losses can offset capital gains plus up to $3,000 of ordinary income per year on the federal return, with unused losses carried forward indefinitely. Most states conform to federal rules for loss treatment, though some have their own carryforward limits.

The Section 121 exclusion lets you exclude up to $250,000 (single) or $500,000 (MFJ) of gain on the sale of a primary residence, provided you owned and used the home as your main home for at least 2 of the last 5 years. Texas generally conforms to the federal exclusion, meaning excluded gain is not taxed at the state level either.

Any gain above the exclusion amount is taxed at federal LTCG rates and (if applicable) state capital gains rates — in Texas's case, no state tax on the excess. Track basis carefully — capital improvements (kitchen remodels, additions, new roofs) raise basis and reduce taxable gain.

Common strategies that work well for Texas households: