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Tax Planning for Realized Gains and Ordinary Income
Tax planning strategies for realized gains and ordinary income
New York Capital Gains Tax Rate 2026–2025 Brackets & How to Reduce Your Tax Bill
If you’ve realized capital gains in New York State in 2026, you’re facing one of the highest combined tax burdens in the country. New York taxes capital gains as ordinary income, meaning your state bill alone can reach 10.9%, on top of federal rates that can push your total liability past 40%.
Understanding exactly how much you owe, and how New York’s tax brackets apply to your specific situation, is the first step to keeping more of what you’ve earned.
In this guide, we’ll walk through how capital gains are taxed in New York State and New York City in 2026, including full bracket tables for both state and federal rates. We’ll also cover proven tax-planning strategies that can significantly reduce your liability:
- Sell appreciated assets through a Charitable Remainder Trust to defer capital gains and spread your tax liability over time.
- Invest in renewable energy projects through Solar Investment Tax Credits to unlock substantial government tax credits that offset your bill.
- Reduce taxable income through charitable strategies like a Charitable Lead Annuity Trust(CLAT).
What are Capital Gains?
A capital gain is the increase in value of a capital asset above what you originally paid for it. Capital assets include stocks, real estate, cryptocurrency, and private business interests; essentially any significant property that can appreciate or depreciate in value over time.
Realized vs. Unrealized Capital Gains
Capital gains are either realized or unrealized:
- Unrealized capital gains are gains that exist on paper; your investment has increased in value, but you haven’t sold it yet. You generally owe no tax on unrealized gains, no matter how large they grow.
- Realized capital gains are gains you’ve locked in by selling the asset. Once you sell, both federal and state taxes apply.
This distinction matters because it creates a planning opportunity: the timing of when you sell and how you sell can significantly affect your tax bill.
Short-Term vs. Long-Term Capital Gains
How long you hold an asset before selling determines which tax rate applies:
- Short-term capital gains (assets held one year or less) are taxed at ordinary income rates, which are the highest rates available. In New York, this means your gain could face a combined federal, state, and city rate exceeding 50% if you’re a high-income NYC resident.
- Long-term capital gains (assets held more than one year) receive significantly more favorable federal tax treatment, with rates of 0%, 15%, or 20% depending on income. New York State, however, does not offer a preferential rate for long-term gains; it taxes both short- and long-term gains as ordinary income.
Unsure which tax strategy best fits your gains? Our experts can help you identify the most efficient way to reduce your capital gains taxes.
How are Capital Gains Taxed?
You won’t owe tax on a gain until you sell the asset and “realize” it, even if your investment has grown 10x or more. Once you do sell, your tax liability depends on three factors: how long you held the asset, your total income for the year, and the state you live in.
For New York residents, capital gains face taxation at two levels( federal and state) and for NYC residents, a third city-level tax applies as well. The 2026 capital gains tax brackets at each level are covered in detail below.
The tables below cover 2026 rates; the current tax year. If you’re filing your 2025 return, the prior-year brackets are included further down.
2026 Federal Short-Term Brackets
Short-term gains (assets held 1 year or less) are taxed as ordinary income.
| Single filers | Married filing jointly | Rate |
|---|---|---|
| $0 – $12,400 | $0 – $24,800 | 10% |
| $12,400 – $50,400 | $24,800 – $100,800 | 12% |
| $50,400 – $105,700 | $100,800 – $211,400 | 22% |
| $105,700 – $201,775 | $211,400 – $403,550 | 24% |
| $201,775 – $256,225 | $403,550 – $512,450 | 32% |
| $256,225 – $640,600 | $512,450 – $768,700 | 35% |
| $640,600 or more | $768,700 or more | 37% |
2026 Federal Long-Term Brackets
Long-term gains (assets held more than 1 year) receive preferential rates.
| Single filers | Married filing jointly | Rate |
|---|---|---|
| $0 – $49,450 | $0 – $98,900 | 0% |
| $49,450 – $545,500 | $98,900 – $613,700 | 15% |
| $545,500 or more | $613,700 or more | 20% |
Special Rate: Collectibles
One exception to the standard bracket structure: gains on collectibles including art, jewelry, antiques, coins, and stamp collections are taxed at a maximum federal rate of 28%, regardless of how long you held the asset.
The Net Investment Income Tax (NIIT)
High-income investors face an additional 3.8% federal surtax known as the Net Investment Income Tax, or NIIT. It applies to most investment income (including capital gains) for taxpayers whose modified adjusted gross income exceeds $200,000 (single filers) or $250,000 (married filing jointly). Everything above those thresholds is subject to the additional 3.8% on top of regular federal rates.
For a New York investor in the top federal bracket selling a long-held asset, this means the effective federal rate on capital gains can reach 23.8% (20% long-term rate + 3.8% NIIT) before New York State adds its own tax on top. Why this matters for New York residents: New York does not have its own equivalent of the NIIT, so it does not apply at the state level. But it does apply to the same gains that New York taxes as ordinary income, meaning high-income New Yorkers are effectively paying three layers of tax on capital gains — federal income tax, NIIT, and New York State income tax.
2026 New York State Tax Brackets (Applies to Capital Gains)
Tax Year 2026 — Single Filers & Married Filing Jointly
| Single filers | Married filing jointly | Rate |
|---|---|---|
| $0 – $8,500 | $0 – $17,150 | 3.9% |
| $8,500 – $11,700 | $17,150 – $23,600 | 4.4% |
| $11,700 – $13,900 | $23,600 – $27,900 | 5.15% |
| $13,900 – $80,650 | $27,900 – $161,550 | 5.4% |
| $80,650 – $215,400 | $161,550 – $323,200 | 5.9% |
| $215,400 – $1,077,550 | $323,200 – $2,155,350 | 6.85% |
| $1,077,550 – $5,000,000 | $2,155,350 – $5,000,000 | 9.65% |
| $5,000,000 – $25,000,000 | $5,000,000 – $25,000,000 | 10.3% |
| $25,000,000 or more | $25,000,000 or more | 10.9% |
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Married
Single
2025 Federal Tax Brackets – For Returns Filed in 2026
Short-term gains (assets held 1 year or less) are taxed as ordinary income.
Tax Year 2025 (returns filed by April 15, 2026) — Single Filers & Married Filing Jointly
| Single filers | Married filing jointly | Rate |
|---|---|---|
| $0 – $11,925 | $0 – $23,850 | 10% |
| $11,925 – $48,475 | $23,850 – $96,950 | 12% |
| $48,475 – $103,350 | $96,950 – $206,700 | 22% |
| $103,350 – $197,300 | $206,700 – $394,600 | 24% |
| $197,300 – $250,525 | $394,600 – $501,050 | 32% |
| $250,525 – $626,350 | $501,050 – $751,600 | 35% |
| $626,350 or more | $751,600 or more | 37% |
Long-term gains (assets held more than 1 year) receive preferential rates — Single Filers & Married Filing Jointly
| Single filers | Married filing jointly | Rate |
|---|---|---|
| $0 – $48,350 | $0 – $96,700 | 0% |
| $48,350 – $533,400 | $96,700 – $600,050 | 15% |
| $533,400 or more | $600,050 or more | 20% |
2025 New York State Tax Brackets ( Applies to Capital Gains)
Tax Year 2025 (returns filed by April 15, 2026) — Single Filers & Married Filing Jointly
| Single filers | Married filing jointly | Rate |
|---|---|---|
| $0 – $8,500 | $0 – $17,150 | 4% |
| $8,500 – $11,700 | $17,150 – $23,600 | 4.5% |
| $11,700 – $13,900 | $23,600 – $27,900 | 5.25% |
| $13,900 – $80,650 | $27,900 – $161,550 | 5.50% |
| $80,650 – $215,400 | $161,550 – $323,200 | 6.00% |
| $215,400 – $1,077,550 | $323,200 – $2,155,350 | 6.85% |
| $1,077,550 – $5,000,000 | $2,155,350 – $5,000,000 | 9.65% |
| $5,000,000 – $25,000,000 | $5,000,000 – $25,000,000 | 10.3% |
| $25,000,000 or more | $25,000,000 or more | 10.9% |
Case Study
Let’s consider Jenna, a New York State investor who purchased 7,000 shares of Apple stock in April 2019 at $50 per share. She decided to sell her shares in January 2026 at a price of $100 each. Since she held the stock for more than one year, her gain is treated as long-term capital gain.
Jenna realized a capital gain of $350,000; she paid $350,000 for the shares (7,000 × $50) and sold them for $700,000 (7,000 × $100), for a net gain of $350,000.
Federal Taxes
To keep this example straightforward, let’s assume this is her only income for the year. With $350,000 in long-term gains, Jenna falls into the 15% federal bracket (which covers income between $49,450 and $545,500 for single filers in 2026). Because of the progressive system, the first $49,450 is taxed at 0%, and only the remaining $300,550 is taxed at 15%, resulting in $45,082 in federal capital gains tax.
Jenna’s gains also exceed the $200,000 NIIT threshold for single filers, so the additional 3.8% Net Investment Income Tax applies to $150,000 of her gains, adding another$5,700.
Her total federal tax liability: $50,782
New York State Taxes
New York taxes capital gains as ordinary income using progressive brackets. Under 2026 rates, Jenna’s $350,000 gain falls into the 5.9% top bracket for her income level. Here’s how it breaks down:
- $0 to $8,500 at 3.9% = $331.50
- $8,500 to $11,700 at 4.4% = $140.80
- $11,700 to $13,900 at 4.5% = $99.00
- $13,900 to $80,650 at 5.15% = $3,437.63
- $80,650 to $215,400 at 5.4% = $7,276.50
- $215,400 to $350,000 at 5.9% = $7,941.40
Total New York State tax: $19,226.83
Note: New York’s 2026 middle-class tax cuts reduced Jenna’s state bill by approximately $2,338 compared to 2025 rates, a direct result of the bracket reductions enacted as part of the state’s fiscal year 2026 budget.
Jenna’s Combined 2026 Tax Summary – $350,000 Capital Gain
Estimated Tax Liability Summary
Combined federal and New York State taxes on capital gains
| Tax | Amount |
|---|---|
| Federal capital gains tax | $45,082 |
| Net Investment Income Tax (NIIT) | $5,700 |
| New York State income tax | $19,227 |
| Total tax liability | $70,009 |
| After-tax proceeds | $279,991 |
What If Jenna Had Sold Sooner? Short-Term Gains Explained
As a quick comparison, consider what Jenna’s tax bill would look like if she had sold her Apple shares after holding them for less than one year. Her $350,000 gain would be classified as a short-term capital gain and taxed as ordinary income at both the federal and New York State levels, with no access to the preferential long-term rates she benefited from above.
At the federal level, her $350,000 would be taxed using the 2026 ordinary income brackets. Falling into the 35% marginal bracket, her federal tax on the same $350,000 gain would be approximately $78,770, compared to $45,082 under long-term treatment. The NIIT would still apply, adding another $5,700.
At the New York State level, nothing changes; New York already taxes capital gains as ordinary income regardless of holding period, so her state bill would remain $19,227.
Case Study — Jenna’s $350,000 Capital Gain · 2026 Tax Year
The cost of selling early: long-term vs. short-term capital gains
Selling the same asset after less than one year triggers $33,688 in additional taxes — with no change to New York State liability.
Long-term (held 1+ year)
Short-term (held under 1 year)
$0$25,000$50,000$75,000$100,000
Long-term total tax
$70,009
After-tax proceeds: $279,991
Short-term total tax
$103,697
After-tax proceeds: $246,303
Holding for one additional year saved Jenna $33,688 in taxes — 9.6% of her original $350,000 gain kept in her pocket instead of going to the government.
Based on 2026 federal long-term capital gains rates, 3.8% NIIT on gains above $200,000, and 2026 New York State income tax brackets. Assumes no other income. Chart by Valur.
How to Reduce (or Defer) Capital Gains Tax in New York
Jenna’s combined tax bill of $70,009 (on a $350,000 gain) illustrates why tax planning for realized gains matters so much for New York investors. Nearly 20 cents of every dollar she gained went to taxes across three levels of government.
The good news: there are several legitimate, IRS-approved strategies that can significantly reduce that liability, some of which can defer or eliminate capital gains tax entirely. The right strategy depends on your specific situation, the type of asset you’re selling, your income level, and your financial goals.
Listed below are some of the most effective options available to New York investors in 2026.
- Defer Capital Gains with a Charitable Remainder Trust (CRT): A Charitable Remainder Trust is one of the most powerful tools available to defer capital gains tax on appreciated assets in New York. Rather than selling directly and triggering an immediate tax bill, you transfer your appreciated assets (stock, real estate, or a private business) into the CRT before selling. Because the trust is tax-exempt, the sale inside the trust generates no immediate capital gains tax. You receive annual distributions over a set term, paying tax only as distributions come in and allowing the full untaxed principal to compound in the meantime. At the end of the trust term, the remaining assets pass to a designated charity. CRTs can substantially increase your after-tax returns compared to a direct sale.
- Renewable Energy Tax Credits: Investing in renewable energy projects can return up to 5.85x your purchase price when you factor in tax savings and cash flow, making it one of the highest-leverage strategies for offsetting a large capital gains tax bill. The federal government offers substantial tax credits and accelerated depreciation for qualifying renewable energy investments, which can directly reduce your income tax liability in the year of investment. This strategy works particularly well for New York investors facing a combined state and federal tax burden in the same year as a large liquidity event.
- Maximize Retirement Account Contributions: Contributing the maximum to a 401(k) or IRA reduces your ordinary taxable income for the year, which can effectively lower the income bracket your capital gains fall into. This is particularly relevant for short-term gains taxed as ordinary income. For 2026, the 401(k) contribution limit is $23,500 ($31,000 if you’re 50 or older). While this strategy won’t eliminate a large capital gains liability on its own, it’s a straightforward first step that every New York investor should take before exploring more advanced structures.
- Charitable Lead Annuity Trust (CLAT): A Charitable Lead Annuity Trust is a tax planning structure that can generate a 100% upfront income tax deduction, making it particularly powerful in a high-income year when you’ve realized significant capital gains. With a CLAT, a charity receives annuity payments for a set term, while you retain the right to receive the remaining assets ( the “remainder interest” ) at the end of the term. Unlike a donor-advised fund where the gift is permanent, a CLAT lets you receive a portion of your charitable contribution back, making it both a tax reduction tool and an estate planning vehicle.
Taking Action on Your New York Capital Gains Tax
New York is one of the most challenging states in the country for investors with significant capital gains. Between federal rates, the NIIT, and New York State’s own income tax ( which reaches 10.9% and applies to both short- and long-term gains equally) the combined tax burden can consume 40% or more of a large gain before you see a dollar of it.
The good news is that the strategies covered in this guide, such as Charitable Remainder Trusts, renewable energy investments, retirement contributions, and Charitable Lead Annuity Trusts are all legitimate, IRS-approved approaches that can meaningfully reduce what you owe. Many of Valur’s clients have used one or more of these strategies to retain six figures or more that would otherwise have gone to taxes.
The key is acting before you sell. Most of these strategies need to be in place prior to a liquidity event to be effective; once you’ve sold the asset, your options narrow significantly.
If you’re planning a sale of appreciated stock, real estate, or a private business in 2026, now is the time to understand your options. Valur’s team can walk you through which strategies apply to your specific situation, what the numbers look like for your gain, and how to get started.
About Valur
At Valur, we are your first step in helping you manage how to lessen your capital gains tax impact.
We’ve built a platform that makes advanced tax planning accessible to everyone. With Valur, you can reduce your taxes by six figures or more, at less than half the cost of traditional providers.
From selecting the right strategy to handling setup, administration, and ongoing optimization, we take care of the hard work, so you don’t have to. The results speak for themselves: our customers have generated over $3 billion in additional wealth through our platform.Want to see what Valur can do for you or your clients? Explore our Learning Center, use our online calculators to estimate your potential savings or schedule a time to chat with us today!
New York Capital Gains FAQs
How much is capital gains tax in New York?
New York taxes capital gains as ordinary income, so your rate depends on your total taxable income for the year. For 2026, New York State rates range from 3.9% to 10.9% depending on your bracket. On top of that, federal long-term capital gains rates are 0%, 15%, or 20%, and high earners also owe an additional 3.8% Net Investment Income Tax (NIIT). If you live in New York City, a city income tax of up to 3.876% applies as well. Combined, a high-income NYC resident can face a total capital gains tax rate exceeding 50% on short-term gains.
Does New York tax long-term capital gains differently than short-term?
No. Unlike the federal government, New York State does not offer a preferential rate for long-term capital gains. Whether you held an asset for 6 months or 16 years, New York taxes your gain as ordinary income using the same progressive brackets. This means that while federal law rewards patience (with 0%/15%/20% long-term rates), your New York State bill is identical regardless of holding period. This makes tax-planning strategies( like Charitable Remainder Trusts) especially valuable for New York residents.
How do I avoid capital gains tax in New York?
You can’t eliminate New York capital gains tax entirely, but several IRS-approved strategies can significantly reduce or defer what you owe:
- Sell appreciated assets through a Charitable Remainder Trust to defer capital gains and spread your tax liability over time.
- Invest in renewable energy projects through Solar Investment Tax Credits to unlock substantial government tax credits that offset your bill.
- Reduce taxable income through charitable strategies like a Charitable Lead Annuity Trust (CLAT).
The key is to act before you sell; most strategies must be in place prior to the sale to be effective.
What is the New York City capital gains tax rate?
New York City does not impose a separate standalone capital gains tax, but NYC residents pay city income tax on top of state and federal taxes, and capital gains are included in that income. NYC’s resident income tax rates range from 3.078% to 3.876% depending on income. For a high-income NYC resident in 2026, the combined tax burden on capital gains looks like this:
- Federal long-term rate: up to 20%
- Net Investment Income Tax: 3.8%
- New York State tax: up to 10.9%
- New York City tax: up to 3.876%
Total combined rate: up to ~38.6% on long-term gains and potentially above 50% on short-term gains taxed as ordinary income.
What is the New York State capital gains tax rate for 2025 vs. 2026?
New York lowered its middle-income tax rates starting in 2026 as part of the state’s fiscal year 2026 budget. The top rates (9.65%, 10.3%, and 10.9%) remain unchanged for high earners, but the lower and middle brackets were reduced , saving most middle-class filers several hundred to a few thousand dollars annually. For example, the bracket covering income up to $215,400 (single filers) dropped from 6.85% in 2025 to 5.9% in 2026. If you’re filing your 2025 return in 2026, use the 2025 brackets shown in the tables above. For gains realized in 2026, use the updated 2026 brackets.
Do nonresidents of New York owe capital gains tax on New York assets?
Yes. Nonresidents of New York who sell New York-based assets ( most commonly real estate) are subject to New York State capital gains tax on the income sourced to New York. This includes rental properties, vacation homes, and commercial real estate located in the state. New York also requires nonresidents to file a Form IT-2663 (Nonresident Real Property Estimated Income Tax) at the time of closing, prepaying the estimated tax on the gain. If you live in another state, you may also owe tax there; though most states offer a credit for taxes paid to other states to prevent full double taxation.
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