Understanding the 2026 Tax Bracket Changes: What Investors Need to Know

Key Changes for 2026

The 2026 tax year brings several important adjustments to federal income tax brackets, standard deductions, and contribution limits. Understanding these changes early gives you time to optimize your tax strategy before year-end.

Capital Gains Tax Rates

Long-term capital gains (assets held over one year) continue to receive preferential tax treatment at 0%, 15%, or 20% depending on your taxable income. Short-term gains are taxed as ordinary income, making the holding period critical for tax efficiency.

Retirement Account Strategies

Maximizing contributions to tax-advantaged accounts like 401(k)s, IRAs, and HSAs remains one of the most powerful tax reduction strategies. The 2026 contribution limits have been adjusted for inflation, offering even more opportunity to shelter income.

Tax-Loss Harvesting

Selling investments at a loss to offset capital gains can significantly reduce your tax bill. Losses exceeding gains can offset up to $3,000 of ordinary income annually, with excess losses carried forward to future years.