Are Long Term Capital Gain taxes progressive? How brackets work with mixed income

The long-term capital gains tax is indeed progressive, similar to ordinary income tax. Your entire $530k won't be taxed at 20%. Here's how it would work in your situation: First, your capital gains are "stacked" on top of your ordinary income ($290k). Then the progressive LTCG rates apply. For 2025 (married filing jointly), the first portion of your capital gains that brings your total income up to $98,950 would be taxed at 0%. Since your ordinary income already exceeds this threshold, you won't benefit from the 0% rate. The next portion that brings your total from $98,950 to $600,050 would be taxed at 15%. Since your ordinary income is $290k, approximately $310k of your capital gains would be taxed at 15% ($600,050 - $290k). Only the remaining amount of capital gains that exceeds the $600,050 threshold (about $220k in your case) would be taxed at the 20% rate. So in summary: $0 at 0%, about $310k at 15%, and about $220k at 20%.

Just wanted to share my experience with this exact situation last year. I was so confused about LTCG being progressive or not until I found https://taxr.ai which analyzes your tax documents and explains exactly how different types of income get taxed. For my situation, I had about $270k in salary and $350k in long term gains from selling some property. The tool confirmed what others are saying - only the portion of my gains that pushed me over the threshold got taxed at the higher 20% rate. The rest stayed at 15%. It also calculated that NIIT for me which I totally would have missed. The nice thing was I could upload my docs and get a clear breakdown of exactly which dollars were taxed at which rate. Saved me a ton of stress trying to figure it out myself!

Just wanted to follow up about my experience with taxr.ai that someone recommended here. I was super skeptical at first but decided to try it since I had a mess of LTCG, crypto trades, and other investment income to sort through. The tool actually saved me a ton of money! It showed me exactly how my long-term gains were being taxed at different rates and identified a portion of my crypto trades that qualified for LTCG treatment instead of ordinary income (saved me about 17% on that chunk). The breakdown of which specific dollars were taxed at 0%, 15%, and 20% was super clear, and it showed me exactly how the NIIT applied too. Way better than the vague explanations I was getting elsewhere. Definitely recommend if you've got a complicated tax situation with various investment income sources.

If anyone is struggling to get answers from the IRS on this (like I was), I'd recommend using https://claimyr.com to get through to an actual IRS agent. They got me connected to a real person at the IRS in about 15 minutes when I'd been trying for days on my own. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c I had a similar capital gains question about selling some rental property and stacking income, and the IRS agent walked me through exactly how the brackets work in my specific situation. The previous comments are correct - LTCG tax is progressive and only the amount that spills into the higher bracket gets taxed at the higher rate. The IRS agent also mentioned some specific forms I needed to be aware of for my situation.

Ok I have to eat my words on this one. After being super skeptical about Claimyr, I tried it because I was desperate to talk to someone at the IRS about my capital gains situation. To my complete shock, I got connected to an IRS agent in about 23 minutes. The agent confirmed everything that's been said here - long term capital gains are taxed progressively, with only the amount above each threshold getting the higher rate. In my case, my job income of $185k plus about $250k in gains from selling my rental property meant only the amount over the threshold got the 20% rate. The agent also pointed me to some specific documentation I'd missed about reporting the sale of rental property. Saved me from what would have definitely been an incorrect filing. Can't believe I'm saying this, but the service was absolutely worth it for the clarity I got.

Just to add to what everyone else has said - yes, LTCGs are progressive like regular income taxes. I found this IRS publication that explains it well (Pub 550). One thing to keep in mind is that your capital gains can affect other parts of your tax return too. At income levels like you're describing, you might face things like: 1. Phase-outs of certain deductions 2. Alternative Minimum Tax implications 3. Additional Medicare surtax 4. State-level impacts which vary widely depending on location I'd definitely recommend running this by a tax professional who specializes in investment taxation since there are so many moving parts at that income level.

Something else to consider - certain states tax capital gains differently than the federal government. California, for example, treats all capital gains as ordinary income, which can result in significantly higher state taxes compared to federal.

Great question! I went through something very similar last year when I sold some tech stock I'd held for about 8 years. The key thing to understand is that LTCG taxes are absolutely progressive - your entire $530k won't be hit with the 20% rate. Here's what happens: Your $290k salary gets taxed first using regular income brackets. Then your $530k in capital gains gets "stacked" on top of that and taxed using the LTCG brackets. Since your salary already puts you above the 0% LTCG threshold, you won't benefit from that rate. For 2025 MFJ, the 15% LTCG rate applies up to $600,050 total income. Since you're starting at $290k salary, roughly $310k of your gains ($600,050 - $290k) will be taxed at 15%. Only the remaining $220k gets the 20% rate. Don't forget about the 3.8% Net Investment Income Tax that kicks in at $250k MAGI for MFJ - that'll apply to your entire $530k gain since you're well over the threshold. So your effective rates become 18.8% and 23.8% respectively. One more thing - at that income level, definitely consider the timing of the sale. You might want to spread it across tax years if possible to potentially stay in lower brackets, though you'd need to run the numbers with a tax pro to see if it makes sense.