You built your portfolio over years of disciplined investing. Deciding when and how to sell is not just a financial question. It is also a tax question, and for high earners, the difference in outcome can be significant.
Capital gains taxes are not new, but 2026 is bringing a shift worth understanding now, not after you have already made the sale.
Short-Term vs. Long-Term: The Rate Gap Is Larger Than People Realize
Capital gains are taxed based on how long you held the asset. Gains on assets held for one year or less are taxed as ordinary income. For high earners, that means rates as high as 37%.
Hold that same asset for more than a year before selling, and the rate drops to a maximum of 20% for long-term gains. Add the 3.8% Net Investment Income Tax that applies to high earners, and the effective rate is still meaningfully lower than the short-term alternative. On a $500,000 gain, the difference between short-term and long-term treatment could easily exceed $80,000.
Timing matters. Not every situation allows for flexibility, but when it does, a few additional months of holding can produce a meaningfully different outcome.
What Is Changing in 2026
The IRS adjusts capital gains thresholds annually for inflation. In 2026, the 15% bracket for long-term gains applies up to $545,500 for single filers and $613,700 for married couples filing jointly. Gains above those thresholds are taxed at 20%.
Executives Often Have More Exposure Than They Realize
Executives frequently hold significant unrealized gains across multiple asset types: company stock accumulated through equity compensation, investment accounts that have grown over years, and sometimes real estate. When you look at each bucket individually, the tax implications can seem manageable. When you add them together, and layer in the net investment income tax, the picture changes.
A client we have worked with held nearly $1.2 million in company stock and had been planning a partial sale to diversify. By spreading the sale over two tax years and pairing it with charitable contributions of appreciated securities, the projected tax liability came down considerably compared to a single-year lump sale. The investment outcome was the same. The tax outcome was not.
Strategies Worth Considering
Tax-loss harvesting is the practice of selling underperforming positions to offset gains realized elsewhere. It does not eliminate the tax, but it reduces the net taxable gain for the year. Installment sales spread gain recognition across multiple years, which can help keep income below bracket thresholds. Charitable giving of appreciated securities eliminates the capital gain on donated shares and generates a deduction for the full market value.
For executives planning a significant liquidity event, whether that is an option exercise, a property sale, or a business transaction, coordinating the timing and structure of that event with both a tax professional and a wealth advisor well in advance gives you the most flexibility.
The Mistake Most People Make
Waiting until December to plan is the most common and costly mistake in capital gains management. By then, your options are narrowed. The best time to think through a major sale is months before it happens, when you still have room to adjust the timing, structure charitable giving, and coordinate across your broader financial picture.
Capital gains planning is not about avoiding taxes. It is about making informed decisions so that the way you sell aligns with your goals as much as the decision to sell in the first place.
Schedule your introductory call with Carnegie Private Wealth to discuss your capital gains exposure and what planning ahead could mean for your 2025 and 2026 outcomes.
Important Disclosures:
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.
All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
The hypothetical example is not representative of any specific investment. Your results may vary.
Securities and Advisory Services offered through LPL Financial, a Registered Investment Advisor. Member FINRA & SIPC.