Do capital gains affect the tax bracket applicable to my ordinary income?

[user17524923356]

Hi.  I understand that capital gains are generally taxed at 15% or 20% depending on amount and filing status.  But if I have a large capital gain, will that push my ordinary income into a higher tax bracket?  For example, if I have a capital gain of $1 million, and $50,000 in ordinary income, I understand the capital gain will be taxed at no more than 20% but what about the $50,000 of ordinary income?  Will it be taxed at the same rate as if the $50,000 were my only income, or will it be taxed in the bracket applicable if my income were $1,050,000?   Thank you.  

[vithalanin]

Your capital gains will be taxed at 0% or 15% or 20% only if they are long term capital gains. Now assuming that they are long term capital gains, your $50,000 in income will be taxes at its ordinary income rate. The tax calculated on the return is $1,000,000 at its long term rate plus $50,000 at the ordinary income tax rate. So say you fall in the 15% bracket for long term gain tax and 12% in the ordinary income tax bracket, your tax will be $150,000 ($1,000,000 at 15%) plus $6,000 ($50,000 at 12%) = $156,000.

Now if your capital gains of $1,000,000 is not a long term capital gain but instead a short term capital gain, then ordinary income tax will be calculated on the total $1,050,000 at the regular income tax rates.

[user17524923356]

Great, thanks for the clear explanation.  Yes, the capital gain would be long term. 

[hbcrac]

If we have an unusual high long term capital gain in 2025, do we have to send tax payments to the IRS during the tax year 2025 OR can the tax be paid at filling in 2026? 

[user17525220452]

If he was married and filing jointly would his Long-Term Capital Gains be charged at the 0% rate?

[vithalanin]

You should look at your 2024 tax liability. As long as you have paid in 100% of your 2024 tax liability in the 2025 tax withholdings, you can pay the balance at the time of filing your 2026 tax return or latest by 4/15/2026. If your withholding for 2025 does not meet or exceed the 100% of your 2024 tax liability, then you will owe penalty on the difference between the 2025 withholding and 100% of 2024 tax liability. 

[vithalanin]

If he was married filing a joint tax return with $1,000,000 in long term capital gains and all other income was below $96,700 for 2025, then yes the capital gains would be at 0%.

[mmaherTE]

The specific answer to your question is that long-term capital gains will not push you into a higher income bracket but short-term capital gains will.  All the links in the responses below are great resources on this topic.