2026 Capital Gains Tax Rates: Short-Term vs. Long-Term
Understanding capital gains taxes can help you make smarter investment decisions, minimize your tax burden, and maximize long-term growth. What is Capital Gains Tax? Capital gains tax applies when you sell an investment for more than you paid for it. The IRS calls these investments capital assets, which include stocks, bonds, real estate, collectibles, or cryptocurrency, all of which can appreciate in value and be sold or exchanged. When you sell an asset for more than you paid, the profit counts as a capital gain. For example, if you buy a stock for $5,000 and sell it for $10,000, you realize a $5,000 gain. Whereas, selling an asset for less than you paid results in a capital loss. For instance, if you sell a cryptocurrency that dropped from $6,000 to $3,000, you incur a $3,000 capital loss. The total capital gains you have in a year are subtracted from the total capital losses, where a $5,000 gain and $3,000 loss, create a net capital gain of $2,000 triggered in taxes. So the amount of tax you owe depends on four main factors: What you sold (type of asset) How long you owned them (short-term vs long-term) Your tax bracket (overall income level) Your filing status (single, married, etc.) Other factors that may apply depending on your situation include state tax, net investment income tax (NIIT) for high earners, and potentially higher taxes on certain collectibles such as coins or art. Note: You only pay capital gains taxes when you realize them, which means you owe taxes only if you sell an asset for a profit. Investments such as stocks, cryptocurrency, or real estate can appreciate in value, but you don’t trigger taxes until you sell at a gain. But, income earned through bonds and dividend stocks are taxed in the year it was received, whether you reinvest it or not. However, assets held and sold within tax-advantaged accounts like IRAs or 401(k)s are generally exempt from these taxes over time. What Are Short-Term Capital Gains? Short-term capital gains are profits you earn from selling a capital asset you’ve held for one year or less. The IRS taxes these gains as ordinary income at rates of 10%, 12%, 22%, 24%, 32%, 35%, or 37%. What Are Long-Term Capital Gains? Long-term capital gains are profits you earn from selling a capital asset you’ve held for at least one year. The IRS generally taxes these gains at lower rates of 0%, 15%, or 20%, with most gains staying under 15%. » Learn more: How To Pay ZERO Taxes On Your Investments (Legally!) 2026 Capital Gains Rates Below shows the 2026 short-term capital gains tax rates on assets sold in 2026, reported on tax returns due in April, 2027. These rates are the same as your ordinary income tax rates. 2026 short-term capital gains (taxed as ordinary income) Source: Internal Revenue Service, “Revenue Procedure 2025-32.” Below shows the 2026 long-term capital gains tax rates on assets sold in 2026, reported on tax returns due in April 2027. These gains are taxed with more favorable rates. 2026 long-term capital gains taxes Source: Internal Revenue Service, “Revenue Procedure 2025-32.” How to Reduce Capital Gains 1. Hold investments longer Holding a capital asset for more than one year lets you take advantage of the more favorable tax rates that apply to long-term capital gains. 2. Use tax-advantaged accounts Investing in traditional IRAs or 401(k)s allow your gains to grow tax-deferred, meaning you pay capital gains taxes only when you withdraw money in retirement. However, Roth accounts are often a preferred choice for many because you pay taxes upfront, and then all future growth and withdrawals are completely tax-free. 3. Consider tax-efficient investments Investments like high-turnover managed mutual funds or high income producing assets that trigger ordinary income are two of the most inefficient investments when it comes to tax purposes. Because of that, when it comes to investing in taxable brokerage accounts, here are a few tips we recommend at InvestLane: Aim for ETFs Aim for low expense ratios Aim for low dividends (If dividends, aim for qualified) Be aware of foreign taxes » Start investing today: Explore and compare top brokerage accounts 4. Consider tax-loss harvesting The IRS taxes you based on your net capital gains, which is your total gains minus your losses, including both short- and long-term. Tax-loss harvesting is intentionally selling investments at a loss to offset gains already realized. Although certain rules apply and this isn’t for everyone, it can effectively lower your taxable income by reducing your net capital gains. Note: If your losses exceed your gains, you can deduct up to $3,000 ($1,500 if filing separately) from your ordinary income each year. Any remaining losses can be carried forward to future years. For example, with $6,000 in losses and $2,000 in gains, you can deduct $3,000 this year and carry the additional $1,000 loss into next year. 5. Rebalance using dividends As markets shift, your portfolio can drift away from its initial target allocation. Rather than selling assets, which may trigger taxes, you can use dividends to buy underperforming assets. Since dividends are taxed either way, this strategy lets you rebalance gradually and more efficiently. 6. Exclude capital gains on your home If you sell your primary home, you can exclude up to $250,000 of capital gains from your taxes, or up to $500,000 if you are married and file jointly. To qualify, you must have lived in and owned the home for at least 2 out of the last 5 years before selling. This exclusion does not apply rental properties or any business-related real estate. Example: If you bought a home for $300,000 and sold it for $500,000. A married couple that meets the requirements could exclude the entire $200,000 gain from taxes. » Stay Ahead: Join our weekly newsletter today 7. Look into robo-advisors For those seeking a hands-off approach, robo-advisors automatically manage your investments and often use tax strategies like tax-loss harvesting to help minimize your
Why So Many Athletes Go Broke After Retirement
Being a top athlete brings great reward but also intense challenges. Discipline, talent, and hard work can create extreme success for an athlete, yet early achievements often bring pressure, poor financial habits, and risky decisions that can derail many. In fact, it was reported in 2009 that 78% of former NFL players faced bankruptcy or financial stress within two years of retirement. Within five years, an estimated 60% of former NBA players went broke, and many retired MLB players faced similar struggles.1 Real Stories Even the most famous athletes face financial challenges. Here are a few real stories: Mike Tyson: At 20, Tyson became the youngest boxer to hold three heavyweight titles simultaneously. He earned over $400 million throughout his career, but declared bankruptcy in 2003 due to lavish spending. Allen Iverson: Iverson earned over $200 million during his 14-season NBA career. He filed for bankruptcy in 2012 but later rebuilt his career and now works as Reebok’s Vice President of Basketball. John Daly: Nicknamed “Long John,” Daly earned over $10 million in PGA winnings and endorsements. He lost over $50 million through gambling and spending, including $1.65 million in one casino session. Lenny Dykstra: MLB All-Star Lenny Dykstra earned millions but filed for bankruptcy in 2009 with $31 million in debt. He also battled substance issues and served six and a half months in prison for hiding assets. Dorothy Hamill: Olympic gold medalist Hamill earned millions but filed for bankruptcy in 1996, advising to trust only people you know. » Learn more: See the top 10 athletes who went broke Top 5 Reasons Athletes Go Broke 1. Short career span Bleacher Report says NBA stars earn $4.79M yearly, compared to $1.9M for NFL players. On average, NBA careers last 4.8 years, while NFL careers average just 3.5 years.2 Meanwhile, Forbes reports that a typical U.S. career lasts 48 years for individuals with a college degree and 52 years for those without one.3 The main difference? Professional athletes earn massive sums in a very short time. Young athletes with wealth often ignore wise financial decisions, leading many into serious debt. Hall of Famer Charles Barkley summed it up this way: “The problem is — it’s not the fact that you can’t afford that car — it’s the fact that the $300,000 you spent on that Bentley, if you bought a car for $70,000, $80,000, you would have had $200,000 more in the bank and it would have been growing and growing, and in one year, three years, five years, twenty years, that $200,000 is going to be worth a lot more.”4 Professional athletes must be especially cautious, as a single injury can end their career in an instant. High incomes often bring high expenses, and when the money stops, many athletes face serious financial struggles. 2. Lack of financial literacy Most professional athletes start their careers only a few years after high school. For many, their first job offers little to no education on finance, investing, or wealth management. Suddenly earning millions with limited experience can lead to costly mistakes. It’s reported that nearly 70% of people who receive sudden wealth, like athletes or lottery winners, go bankrupt within a few years.5 Those who lack a basic understanding of taxes, budgeting, or compound interest often make risky investments or trust the wrong people with their money. Former NBA player Antoine Walker filed for bankruptcy two years after retiring, highlighting challenges of managing fast-earned money. He recalled that his first paycheck was $1.6 million but didn’t realize taxes would reduce it to $800,000.6 » Ready to build financial confidence? Watch more on our YouTube channel 3. Overspending Above all, the biggest financial problem athletes face is overspending. Luxury cars, designer clothes, and other high-ticket purchases often put them in difficult financial positions. With money coming in fast, many adopt lifestyles they cannot sustain after their careers end. The habit of spending and the pressure to maintain status often remain, even when their income stops. Even top athletes who move into post-retirement careers, like broadcasting, rarely earn anything close to their peak salaries. Cam Newton, former NFL MVP and Carolina Panthers quarterback, has spoken openly about his financial struggles. At one point, he was making $20 million a year, but now he creates online content “to keep the lights on.” Drawing from his own experience, he says the main reason many wealthy athletes go broke is their failure to scale back spending when income drops.7 Surprisingly enough, one study found that an estimated 36% of individuals earning over $200,000 per year still live paycheck to paycheck.8 4. External pressure Athletes face pressure to perform and support family, friends, and communities, often at personal costs. A family member may need a new car, a friend might push a business venture, or a community may request generous donations. This constant pressure can lead athletes to take on financial obligations that create significant expenses after retirement. Court documents show that former NFL player Clinton Portis fell into severe debt, including: $500,000 owed to his mother $412,000 owed to four different women for domestic support. $390,000 due to the IRS $287,000 owed to the MGM Grand casino $170,000 to the Borgata Hotel Casino & Spa9 Aside from that, ESPN’s 30 for 30 documentary on former NFL quarterback Michael Vick covers how growing up in poverty placed a heavy burden on him to take care of his friends and family.10 5. Legal and personal costs Divorces, legal troubles, and personal issues related to addictions or health problems can destroy even the wealthiest athlete’s finances. In fact, it was reported that divorce rates for professional athletes are between 60-80%, which can result in the loss of more than half of your net worth, depending on the situation.11 Because athletes are public figures, they often become prime targets for legal claims. Even a single major issue can set them back years in earnings, especially when the average professional career lasts only a few years. Life
Top 10 Athletes Who Went Broke (Key Lessons to Learn)
In 2009, Sports Illustrated reported that 78% of former NFL players, within two years of retirement, have gone bankrupt or are under financial stress because of joblessness or divorce. Within five years, an estimated 60% of former NBA players are broke, and many retired MLB players have faced similar challenges.1 Now this article is intended to help you learn from past mistakes and make smarter financial decisions going forward. Many of the athletes mentioned have bounced back and now openly share their experiences to guide and inspire others. » Note: All earnings are estimates based on the athlete’s sports career. Private endorsements and sponsorships may not be fully included and could significantly increase their total earnings. 1. Mike Tyson: Earned $400 million At 20, Tyson became the youngest boxer to hold three heavyweight titles at once. He earned over $400 million during his career but declared bankruptcy before retiring in 2003. Tyson has openly discussed his financial struggles, admitting he spent recklessly on jewelry, luxury cars, and even exotic pets like tigers.2 2. Evander Holyfield: Earned $250 million Bleacher Report estimates that legendary boxer Evander Holyfield earned $250 million over his career.3 In fact, ESPN notes he made $34 million alone from his second fight with Mike Tyson in 1997. Despite the success, Holyfield faced major financial troubles. His 54,000-square-foot mansion with 109 rooms went into foreclosure, and he owed large amounts in unpaid child support. After years of lawsuits, he filed for bankruptcy in 2012. 3. Allen Iverson: Earned $200 million Allen Iverson, one of the NBA’s most agile scorers and flashiest playmakers, earned over $200 million during his 14-season career.4 Despite his success, he spent heavily on cars and a lavish lifestyle, which left him in financial trouble after retirement. He filed for bankruptcy in 2012. Iverson has since admitted to his mistakes and rebuilt his career. Today, he serves as Reebok’s Vice President of Basketball under Shaquille O’Neal. 4. Michael Vick: Earned $116 million Former NFL quarterback Michael Vick signed two massive contracts in his career: a 10-year, $130 million deal with the Falcons in 2005 and a six-year, $100 million deal with the Eagles in 2011, which guaranteed $40 million.5 He played 13 seasons but never finished either contract (six years with Atlanta and five with Philadelphia).6 Vick’s career fell apart due to legal troubles related to dog fighting. He served time in prison and filed for bankruptcy in 2008. 5. Antoine Walker: Earned $110 million Former NBA player Antoine Walker earned $110 million in salary, according to ESPN, plus millions more from endorsements.7 His downfall came from heavy exposure to real estate, and the 2007–2008 housing market crash wiped him out. In an interview, Walker revealed that his first NBA contract was worth $1.6 million, but after buying a home for his mother, a condo for himself, and two cars, he was already in debt by his rookie year. Taxes cut his income further, leaving him with about $800,000. Walker filed for bankruptcy in 2010.8 6. Terrell Owens: Earned $80 million The NFL ranks Terrell Owens as the sixth-best wide receiver of all time. He earned an estimated $80 million during his career, including a seven-year, $49 million deal with the Eagles in 2004. Owens’ downfall came from trusting others to manage his money, which led to devastating losses.9 In 2012, he publicly declared bankruptcy. 7. Lenny Dykstra: Earned $58 million Former MLB All-Star and World Series champion Lenny Dykstra, nicknamed “Nails” for his gritty style of play, earned tens of millions over 12 seasons in the league. However, by 2009, he filed for bankruptcy, claiming more than $31 million in debt and only $50,000 in assets.10 Aside from that, he battled drug and alcohol issues and later served six and a half months in prison for hiding baseball gloves and other assets that should have been included in his bankruptcy filings.11 8. John Daly: Earned $55 million Nicknamed “Long John” for his powerful swing, John Daly earned tens of millions through prize money and endorsements. The PGA ranks him 263rd on the all-time earnings list with career winnings of $10,270,681.12 Between 1991 and 2007, Daly admitted to losing more than $50 million on gambling and reckless spending, including $1.65 million in a single five-hour casino session. 9. Lawrence Taylor: Earned $50 million Lawrence Taylor, former NFL linebacker and Hall of Famer, earned $50 million in his career. However, much of it was lost due to cocaine, lavish spending, and partying. After retirement, he faced multiple arrests for drug-related offenses and was guilty of filing a false tax return. He declared bankruptcy in the late ’90s.13 10. Dennis Rodman: Earned $27 million Dennis Rodman, one of the most energetic and dominant rebounders in NBA history, helped lead the Bulls to multiple victories alongside Scottie Pippen and Michael Jordan. His extravagant lifestyle included a friendship with Kim Jong Un and skipping NBA Finals practices for wrestling shows. On top of that, he also had a large interest for fashion, cosmetics, and partying. Over time, gambling, divorces, and child support obligations drained his finances. By 2012, he struggled to pay bills and even faced brief jail time.14 All in all, these short stories teach valuable lessons that no matter how much you earn, lasting wealth depends on discipline, smart choices, and learning from the mistakes of others. » Learn more: See why so many athletes go broke after retirement
Best Places to Park Short-Term Cash in 2026
When you have cash you’re not ready to invest in the stock market, leaving it in a regular checking account is basically giving away free money. The national average rate on traditional savings accounts sits at just 0.39%.1 That’s barely enough to buy a coffee with a year’s worth of interest on $10,000. You have better options. In 2026, high-yield savings accounts, certificates of deposit, and money market accounts are paying solid returns while still keeping your money safe. These aren’t investments where your principal goes up and down with the market. Your money sits there, earns interest, and stays protected by federal deposit insurance. Let’s review and decide which option may be the best for your situation. High-Yield Savings Accounts (HYSAs) Here’s the thing about high yield savings accounts: they’re simple, they pay well, and you can access your money whenever you need it. Think of them as your regular savings account’s much more generous cousin. Same basic structure, but instead of earning basically nothing, you’re actually making money on your balance. High-yield savings accounts are not designed for everyday spending or daily transactions. These accounts are best used for saving your money, not for day-to-day financial activities. What Makes Them “High-Yield” The difference between a high yield account and a traditional savings account comes down to where the bank operates. Online banks don’t pay for hundreds of physical branches, so they can afford to pay you more interest. Your deposits are still FDIC insured up to $250,000 per depositor, per institution, just like any traditional bank.2 Right now, top high yield savings accounts are paying around 3.40% to 3.90% APY. On a $20,000 balance, that’s roughly $680 to $780 in interest over a year. Not exactly life-changing money, but way better than the $78 you’d earn in a regular savings account. » Earn more on your savings: Explore top high-yield savings accounts today How Your Interest Compounds Most high yield accounts compound interest daily and credit it monthly, this is key. That means you are earning interest on your interest, which adds up faster than you’d think. Compounding helps your money grow more quickly in a high-yield savings account because each time interest is added, your balance increases and future interest is calculated on that higher amount. Here’s a practical example: Park $10,000 in an account earning 3.75% APY. After one year, you’d have about $10,381. The first month you earn interest on $10,000. The second month you earn interest on $10,031. By month twelve, you’re earning interest on $10,350. It’s not dramatic month-to-month, but it adds up over time. Getting Your Money When You Need It Most high yield accounts let you transfer money to your regular checking account in 1-3 business days using standard ACH transfers. Some banks offer even faster options. A few also provide ATM cards if you want physical cash access, but that’s less common with online-only banks. Most high-yield savings accounts also provide users with online banking and online transfers, making it easy to manage your savings remotely. Top High-Yield Savings Accounts Worth Considering When you’re comparing savings options, you want accounts that combine solid rates with reliability. Rates and features can vary depending on the bank or credit union and other factors such as fees, minimum balances, and customer service. Here’s what’s available right now: Our Top Picks for High-Yield Savings Looking at current rates and overall value, a few accounts stand out: Western Alliance Bank leads the pack with zero monthly fees and just a $0.01 minimum to earn the top rate. As a Member FDIC institution, your deposits are federally insured up to the applicable limits.3 CIT Bank and Quontic both offer competitive rates with their Platinum Savings and standard savings accounts respectively. Both are Member FDIC banks with solid mobile apps and responsive customer service, which matters when you’re dealing with your emergency fund. Capital One has their 360 Performance Savings account and brings the trust of a major financial brand. As a Member FDIC bank, your savings are federally insured. They also have a large ATM network through their banking relationships, giving you more flexibility than most online-only banks. SoFi offers their Checking and Savings Account, and while the rates are standard, they’ve earned a “Top Pick” designation for their combination of features including cash back rewards, bonus offers, and no account fees. Barclays is also a competitive options to consider that is great for those seeking a simple to use high-yield savings account. For the absolute highest current rates, some accounts are pushing higher yields, though these tend to come from smaller institutions with more restrictions or requirements like maintaining direct deposit. Check out today’s top high-yield savings accounts rates and compare your options Beyond the APY The highest advertised rate is not necessarily the best deal. A bank offering 4.50% APY might require a $25,000 minimum balance to earn that rate, while another offering 4.30% APY might have zero minimums. What to look for: No monthly fees (top accounts never charge these) Low or zero minimums (some accounts require a minimum deposit or minimum amount to open, often under $500, while others have no minimum deposit requirement at all) Fast transfer speeds (1-2 days max for ACH) Reliable customer service (you’ll want help if something goes wrong) On balances under $100,000, a 0.20% difference in APY ends up being about $200 per year. If a bank with a slightly lower rate offers much better service or convenience, that’s usually the smarter choice. Building Your Emergency Fund the Smart Way Financial advisors typically recommend keeping 3-6 months of living expenses in an account that’s easy to access. A high yield savings account is perfect for this. These accounts are a type of deposit account designed for safe, accessible savings. You earn interest while the money sits there, but you can grab it within a couple days if your car breaks down or you lose your job. Let’s say your monthly expenses run $4,000. That means your emergency
