9 Capital Gains Tax Moves to Make Before You Sell Anything in 2026
Here’s the situation a lot of our clients find themselves in right now: they’re sitting on a taxable brokerage account that’s grown dramatically over the past few years, they know they should rebalance or trim some positions, and they’re frozen, not because they don’t know what to do with the money, but because the tax bill feels too big to pull the trigger.
That freeze is understandable, but it’s also expensive. The S&P 500 has climbed more than 75% since the beginning of 2023, according to Bank of America’s head of national wealth strategies Mitchell Drossman. If you’ve been invested, you have gains, probably big ones. And as Drossman told CNBC in April 2026, capital gains have become “the biggest tax story” of the year for wealthy investors.
The good news: 2026 is an unusually rich year for planning options. There are nine specific moves worth knowing about, and some of them are only available for a limited window. Here’s what they are, who each one is for, and what to do about it.
For 2026, long-term capital gains rates sit at 0%, 15%, and 20% depending on taxable income, with the 0% bracket going up to $98,900 for married couples filing jointly. The 3.8% Net Investment Income Tax (NIIT) can push effective rates to 23.8% for high earners. Several time-sensitive moves, from gain harvesting at the 0% bracket to the December 31 Qualified Opportunity Zone deadline, are available this year that won’t look the same in 2027. The nine strategies below are ordered roughly by who they apply to and when they need to act.
For newly retired or low-income years
1
Harvest Gains at the 0% Rate While the Window Is Open
This one surprises people. If you’re in a year where your taxable income is below $98,900 (married filing jointly in 2026), you can sell appreciated long-term stock and pay exactly 0% in federal capital gains tax. You read that right, zero.
The 0% bracket applies to taxable income after deductions. For a retired couple with $80,000 in pension and IRA withdrawals, the standard deduction alone ($32,200 for MFJ in 2026) brings their taxable income low enough to sell a meaningful amount of appreciated stock without triggering any capital gains tax. It’s also a way to rebalance a concentrated position without a tax hit. Importantly, any gains you realize will count as taxable income, so you need to model the numbers carefully before you sell.
The window for 0% gains typically exists in the years between retirement and when Social Security, RMDs, and other income kick in. If that describes your situation right now, this is worth a serious look.
Source: Kiplinger — IRS Updates Capital Gains Tax Thresholds for 2026; CNBC — How much you can make in 2026 and still pay 0% capital gains
For high earners with investment income
2
Understand the NIIT, and Why Its Threshold Never Moves
Here’s what most investors miss: above a certain income level, capital gains don’t just get taxed at 20%. They get taxed at 23.8%, because the 3.8% Net Investment Income Tax (NIIT) stacks on top.
The NIIT kicks in when your modified adjusted gross income (MAGI) exceeds $200,000 for single filers or $250,000 for married couples filing jointly. Unlike the capital gains brackets, these thresholds are not adjusted for inflation. They’ve never moved since the tax was introduced in 2013. That means more investors get caught every year, not because they got dramatically richer, but because incomes and portfolio values have quietly risen. The NIIT applies to the lesser of your net investment income or the amount by which your MAGI exceeds the threshold. So if you’re $60,000 over the threshold with $200,000 in capital gains, you owe NIIT only on $60,000, not the full gain.
A large realized gain can push you over the NIIT threshold in a year you didn’t expect. Running income projections before any sale is essential, not optional.
Source: IRS Topic 559 — Net Investment Income Tax; TLD Law — OBBBA Individual Tax Changes
For anyone with a charitable bent
3
Give Stock to Your Donor-Advised Fund, Not Cash
If you’re going to give to charity anyway, this is one of the cleanest tax moves available, and it’s better with appreciated stock than with a check.
When you donate long-term appreciated stock directly to a donor-advised fund (DAF) or other public charity, you avoid recognizing the capital gain entirely. The DAF sells the stock; you don’t. You also get a charitable deduction for the full fair market value of the shares (subject to a 30% of AGI limit for appreciated assets held over a year). Compare that to selling the stock, paying up to 23.8% in federal capital gains taxes, then donating the after-tax proceeds, you’d have significantly less to give. One important update for 2026: a new 0.5% of AGI floor now applies to itemized charitable deductions, and taxpayers in the top (37%) bracket see the effective value of deductions capped at 35%. These new rules make it worth modeling the numbers with a tax advisor before year-end.
Fund your DAF with your highest-basis-cost, most-appreciated stock, not cash. If you plan to give over several years, “bunch” future gifts into a single large DAF contribution now to exceed the standard deduction threshold.
Source: Fidelity Charitable — Donating Stock to Charity; Darrow Wealth Management — How to Donate Stock to Charity (2026)
$98,900
The 2026 taxable income ceiling for married couples to pay 0% on long-term capital gains, up from $96,700 in 2025
Source: IRS Rev. Proc. 2025-32 via Kiplinger
For investors with volatile Q1 losses
4
Use Tax-Loss Harvesting to Offset Gains, Including Aggressive Long-Short Strategies
The first quarter of 2026 was rough for a lot of portfolios, the S&P dropped roughly 4.3% before bouncing back. That volatility created a real harvesting window, and advisors at Bank of America and other major wealth managers have been actively working through it.
Standard tax-loss harvesting works like this: you sell a position that’s underwater, lock in the loss, and use it to offset realized gains elsewhere in your portfolio. Up to $3,000 in net capital losses can offset ordinary income per year, with excess carrying forward. More affluent clients are increasingly using direct indexing, owning individual stocks that replicate an index rather than a fund, which creates many more harvesting opportunities. A small number of high-net-worth investors are exploring long-short harvesting strategies, which borrow against portfolios to create short positions that generate losses even as the long book appreciates. These are complex and involve meaningful costs and risks, they’re not for everyone, but they illustrate just how seriously advisors are approaching embedded gains right now.
If your portfolio has positions sitting in the red after Q1, don’t ignore them. Those losses have real dollar value when you’re sitting on gains elsewhere. Wash-sale rules apply, you can’t buy back the same security within 30 days.
Source: Parametric Portfolio — Tax-Loss Harvesting in Volatile Equity Markets, Q1 2026; CNBC — How the Wealthy Aim to Cut Their 2026 IRS Bills
For investors with concentrated single-stock positions
5
Consider an Exchange Fund to Diversify Without Selling
You know the problem: a big slug of your wealth is sitting in one stock, maybe a former employer, maybe a family holding, and selling it means handing 20% to 23.8% of the gain to the IRS. You’d rather not. But holding means concentration risk keeps you up at night.
Exchange funds are a structural solution. You contribute your concentrated shares to a private partnership fund alongside other investors with different stocks. Because it’s treated as a non-taxable exchange (under Section 721 of the tax code), no gain is recognized at contribution. After a holding period, typically seven years, required by tax law, you receive a diversified basket of the fund’s holdings instead of your original stock. Taxes on the original gain are deferred until you eventually sell the basket. Minimum investments often run from $500,000 to $1 million per position, and most traditional funds require participants to be qualified purchasers (at least $5 million in investments). The funds also hold at least 20% in illiquid “qualifying assets” (often real estate) as required by tax law, so you’re not getting a pure equity portfolio. This is a genuine trade: you give up liquidity and some control over your final basket in exchange for tax deferral and immediate diversification.
If your single-stock position exceeds 15–20% of your net worth and you have the investment horizon to commit for seven-plus years, this is worth exploring. It’s not a simple product, it deserves a careful conversation with an advisor who can model the alternatives.
Source: Kitces.com — When to Use Exchange Funds to Diversify Concentrated Holdings (2026)
Hard deadline: December 31, 2026
6
Lock In Qualified Opportunity Zone Deferral Before the Rules Change
This one has a clock on it. The original Qualified Opportunity Zone (QOZ) program allowed investors to defer capital gains by reinvesting them in a Qualified Opportunity Fund (QOF) within 180 days of the sale. That deferral was set to end December 31, 2026, and the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, kept that deadline in place for the original rules while launching a new version of the program starting January 1, 2027.
Under the original (pre-2027) rules, gains deferred into a QOF are recognized at December 31, 2026 or when you sell the fund, whichever comes first. If you hold the QOF investment for at least 10 years, any appreciation in the fund itself is excluded from capital gains entirely. The new post-2026 framework (Opportunity Zones 2.0) replaces the fixed deferral date with a rolling five-year period and offers a 10% basis step-up at five years (or 30% for investments in rural opportunity zones). If you’re planning to realize a substantial gain in the second half of 2026, it may be worth considering whether you have enough time to complete an eligible reinvestment and benefit from the deferral under the current rules before December 31.
QOZ investments carry real investment risk and illiquidity, they need to stand on their merits as investments, not just as tax shelters. Work with advisors who have done the due diligence on specific funds.
Source: RSM — OBBBA Rekindles Opportunity Zones; Plante Moran — The OBBBA and Opportunity Zones 2.0; EY Tax News — OZ Program, 2027
The hidden trap for incomes $505K–$605K
7
Watch Out for the SALT Torpedo If You’re Realizing a Big Gain
This is one of the more counterintuitive tax interactions of the year, and it catches people by surprise.
The One Big Beautiful Bill Act raised the SALT deduction cap to $40,400 for married filers in 2026, a big improvement over the old $10,000 ceiling. But that expanded cap phases out for taxpayers with MAGI above $505,000, falling by 30 cents for every dollar above the threshold. It disappears entirely (reverting to $10,000) once MAGI reaches roughly $605,000. Here’s where it gets costly: if you realize a large capital gain that pushes your income into that $505,000–$605,000 range, each extra dollar of gain does double damage, it raises your taxable income directly, and it reduces your SALT deduction simultaneously. Elliott Davis offers a clear illustration: a couple with MAGI of $600,000 and $40,000 in SALT expenses can deduct only $10,000, compared to the full $40,000 at $500,000 of MAGI. A $100,000 MAGI increase effectively raises taxable income by $130,000. This is what tax professionals are calling the “SALT torpedo.”
If your income normally runs close to $500,000, you need to model the SALT interaction before recognizing any large gain this year. Timing the sale to stay just under the phase-out threshold, or just past it, can matter meaningfully.
Source: Elliott Davis — How Changes to the SALT Deduction Could Affect Your Tax Planning; The Tax Adviser — The 2025 SALT Shake-Up
For sellers of appreciated real estate or businesses
8
Use an Installment Sale to Spread the Gain Over Multiple Years
If you’re selling real estate, a business interest, or another large appreciated asset, you don’t have to take the entire gain in one tax year. An installment sale lets the buyer pay you over time, and you recognize the proportional gain in each year you receive a payment.
The advantages are real. A lump-sum gain large enough to push you into the 20% capital gains bracket, or over the NIIT threshold, might stay in the 15% bracket if spread across three years. It can also keep you below the SALT phase-out threshold, avoid a spike in Medicare IRMAA surcharges, and prevent a one-time spike from reducing other income-based deductions. The trade-off is real too: you’re accepting counterparty risk (the buyer could stop paying), delaying your full proceeds, and losing the ability to reinvest the full sale price immediately. But for a seller who doesn’t need all the cash at closing, it’s a powerful tool, particularly in years like this one when the stakes are high and income management matters.
If you have a sale pending, run the installment-sale numbers alongside the lump-sum scenario before you finalize deal terms. The tax difference can be substantial, and renegotiating after the fact is much harder.
Source: IRS Publication 537 — Installment Sales
For estates under $30M that shifted focus from estate to income tax
9
Rethink Your Plan Now That the $15M Estate Exemption Is Permanent
This is less a selling move and more a planning reset, but it affects how you think about which assets to hold, which to give away, and which to leave at death.
The OBBBA made the federal estate and gift tax exemption permanent at $15 million per individual ($30 million for married couples), effective January 1, 2026, indexed for inflation going forward. That’s a big deal because it shifts the calculus for millions of families. With estate taxes off the table for most people below those thresholds, the dominant tax concern is now income tax and capital gains tax during life and at transfer. Under current law, assets held until death receive a step-up in basis to fair market value, meaning your heirs could inherit a stock portfolio that’s worth $2 million and sell it the next day with no capital gains tax on decades of appreciation. That changes how you should think about which assets to sell now versus hold. Highly appreciated assets you don’t need may be better left in the estate rather than sold. Assets with high ordinary income potential may be better candidates for gifting or distributing during life.
If your estate plan was built around minimizing estate taxes under the old temporary framework, it’s likely worth a fresh review. Capital gains planning has become the primary income-tax story, and the two have to be coordinated.
Source: Arnold & Porter — OBBBA Estate and Gift Tax Exemption; BNY Wealth — How the $15M Exemption Reshapes Multigenerational Giving
Common Questions
What is the 0% long-term capital gains rate threshold for 2026?
For 2026, married couples filing jointly can have up to $98,900 in taxable income and still pay 0% on long-term capital gains. Single filers get up to $49,450. Taxable income is calculated after subtracting deductions, including the standard deduction of $32,200 for MFJ, from adjusted gross income. If your taxable income falls below those thresholds, any realized long-term gains would be tax-free federally.
Source: Kiplinger — IRS Updates Capital Gains Tax Thresholds for 2026
What triggers the 3.8% Net Investment Income Tax (NIIT) in 2026?
The NIIT applies when your modified adjusted gross income (MAGI) exceeds $200,000 (single) or $250,000 (married filing jointly). These thresholds are not indexed for inflation and have not changed since 2013. The tax is 3.8% on the lesser of your net investment income or the amount by which your MAGI exceeds the threshold. For someone in the 20% capital gains bracket who also owes NIIT, the effective federal rate on a gain is 23.8%.
How does donating appreciated stock to a donor-advised fund save on capital gains taxes?
When you transfer long-term appreciated stock directly to a DAF, you avoid recognizing the capital gain, the charity sells it, not you. You also receive a deduction for the full fair market value (subject to a 30% of AGI limit for appreciated assets). In 2026, a new 0.5% of AGI floor applies before the charitable deduction counts for itemizers, and top-bracket taxpayers see the effective deduction rate capped at 35%. Still, for investors sitting on large embedded gains, the combination of gain avoidance and deduction typically beats selling and donating the after-tax proceeds.
Source: Fidelity Charitable; IRS Publication 526
What changed about Qualified Opportunity Zones under the One Big Beautiful Bill Act?
The OBBBA (signed July 4, 2025) made the QOZ program permanent and introduced a new version starting January 1, 2027. Under the new framework, gains invested in a QOF after December 31, 2026 are deferred on a rolling five-year basis, replacing the old fixed December 31, 2026 deadline, with a 10% basis step-up at five years (30% for qualified rural opportunity funds). Investments held 10+ years still qualify for exclusion of fund-level appreciation. The original deadline still applies to gains invested under the old rules, so any planned 2026 reinvestment should be completed before December 31.
Source: RSM; EY Tax News
What is the SALT torpedo, and who is at risk in 2026?
The SALT torpedo is what happens when a capital gain pushes your MAGI into the OBBBA’s SALT phase-out range of roughly $505,000–$605,000 for married filers in 2026. The expanded SALT cap ($40,400 for MFJ) phases down by 30 cents for every dollar of MAGI above $505,000. So each extra dollar of realized gain reduces your SALT deduction by $0.30 at the same time it raises your taxable income, a compounding effect. A couple going from $490,000 to $605,000 in MAGI can lose the entire expanded SALT benefit, effectively paying tax on $130,000 of additional income for a $100,000 MAGI increase.
Source: KLR — The SALT Torpedo; Elliott Davis
Rules of Thumb Only Get You So Far
Every one of these moves interacts with your specific income, your state taxes, your asset mix, your other deductions, and your timeline. Run one in isolation and you might save money. Run several together, well-coordinated, and the difference can be six figures. Miss the SALT torpedo or the QOZ deadline and it could cost you the same.
If you’d like to think through how any of this applies to your situation, especially if you’re approaching a significant liquidity event or you’re newly retired with a window of lower income, the team at Madison Partners is happy to have that conversation.
This content is for educational purposes only and should not be considered financial, tax, legal, or investment advice. Individual circumstances vary, and readers should consult with a qualified financial advisor, tax professional, or attorney before making decisions based on this information. Madison Partners does not guarantee the accuracy of third-party data cited herein.
