There is no special capital gains rate for seniors. But after 65 a gain costs more than the tax rate shows: it can make more of your Social Security taxable, shrink the new $6,000 senior deduction, and raise your Medicare premiums two years later. Enter your numbers to see all of it in one place.
By Hans Goldstein, EA, founder, Retirement Literacy Foundation. 2026 federal law, every rate sourced below.
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Worked example
A married couple, both 67, in Arizona sells a rental for $900,000. They paid $300,000, added $40,000 of improvements, took $120,000 of depreciation and pay $50,000 to sell. They get $48,000 of Social Security and $70,000 of pension and IRA income.
| Line | Amount |
|---|---|
| What the sale costs you, tax plus Medicare | $153,481 |
| Amount realized (price minus selling costs) | $850,000 |
| Adjusted basis | $220,000 |
| Total gain | $630,000 |
| Taxable gain | $630,000 |
| Gain you could take at $0 federal income tax this year | $35,600 |
| More of your Social Security made taxable by the sale | $0 |
| Federal income tax (incl. lost senior deduction, any AMT) | $106,370 |
| Net investment income tax (3.8%) | $18,650 |
| Arizona tax | $15,750 |
| Medicare IRMAA in 2028 from this sale (2 people) | $12,710 |
Spread the same taxable gain over 5 years with an installment sale and the tax drops from $140,770 to $71,926: they keep $68,844 more (2026 law and income held flat; interest on the note left out).
Computed October 13, 2026 with the same engine the calculator uses: 2026 federal brackets (IRS Rev. Proc. 2025-32), state rates as coded for 2026. Illustrative; your numbers will differ.
How it works
Common questions
Yes, at the same rates as everyone: 0%, 15% or 20% on long-term gains, plus 3.8% NIIT above $250,000 joint or $200,000 single. Age changes the side effects, not the rate.
No. It was repealed for sales after May 6, 1997. Today anyone, at any age, can exclude up to $250,000 ($500,000 married) of gain on a main home they owned and lived in 2 of the last 5 years.
As much as fits under $98,900 of taxable income, after the standard deduction and the senior deduction. Because the gain can also make Social Security taxable, the real room is often smaller than it looks; the calculator works it out.
Possibly, two years later. 2028 premiums use 2026 income. For 2026 the first IRMAA line is $218,000 joint and $109,000 single (CMS). One dollar over a line triggers the whole surcharge for that tier.
An installment sale reports the gain as you are paid (IRC 453), which can keep each year in a lower bracket, below the IRMAA lines and below the senior deduction phase-out. The calculator compares one year with several.
Related: The old over-55 home sale exemption · IRMAA calculator · Home sale capital gains calculator · Social Security tax calculator · Rental property capital gains calculator · Capital gains tax calculator
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Reviewed for the Retirement Literacy Foundation, a 501(c)(3) education nonprofit. Prepared by Hans Goldstein, EA, retirement educator. Admitted to practice before the IRS. Informational only. Not tax, legal or investment advice. Every figure below cites its source so your CPA or attorney can check it.
Figures are 2026 federal amounts unless stated. Examples are illustrative and rounded; your numbers will differ. By Hans Goldstein, EA, founder, Retirement Literacy Foundation. Last reviewed .
Hans Goldstein is an Enrolled Agent, admitted to practice before the Internal Revenue Service. Not affiliated with or endorsed by the IRS.