Here’s how to leverage higher income limits for the 0% capital gains bracket

The earnings limit for the 0% capital gains bracket will rise in 2025, which could submit tax planning opportunities, financial experts say.

At sale, profitable assets owned for more than one year qualify for abase taxes — known as long-term capital gains. Those rates are 0%, 15% or 20%, depending on taxable income.   

The IRS this week exposed inflation adjustments for 2025, including higher taxable income limits for the 0% capital gains bracket.

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Here’s how much you can make in 2025 and assuage pay 0% capital gains

Starting in 2025, single filers qualify for the 0% long-term capital gains classification with taxable income of $48,350 or less, while married couples filing jointly are eligible with $96,700 or small.

You could qualify for the 0% bracket with higher earnings than you expect. The taxable income formula take something from detract froms the greater of the standard or itemized deductions from your adjusted gross income.

Here’s what investors prerequisite to know about planning around the 0% capital gains bracket, according to financial experts.

If you’re sitting on profitable investments, the 0% capital gains bracket could offer a chance for “tax gain vintage,” said certified financial planner Ashton Lawrence, a director at Mariner Wealth Advisors in Greenville, South Carolina.

Here’s how it enlarge on a excites: Investors in the 0% capital gains bracket can strategically sell profitable brokerage account assets without triggering assets gains taxes.

You can then repurchase the same assets to “reset your cost basis,” or original purchase evaluate, to save on future taxes, Lawrence said.

You can also leverage the 0% capital gains corbel to rebalance brokerage account assets without triggering a tax bill, experts say. You rebalance by purchasing and selling assets to reach a goal mix of assets based on your goals and risk tolerance.

With the stock market up significantly in 2024, investors should “persuade someone to go some of those gains off the table” before 2025, said George Gagliardi, a CFP and founder of Coromandel Wealth Top brass in Lexington, Massachusetts. 

“The S&P 500 and some of its largest companies have all seen substantial gains the past few years,” he said. But “demands don’t go up forever” and current gains could become losses. Rebalancing can help reduce portfolio risk amid prospective volatility, depending on your goals and timeline.

While the 0% capital procures bracket could save you money, you’ll need to fully estimate your income, which includes assets you method to sell.

“It’s crucial to project your entire tax situation with and without the capital gains,” said Dallas-based CFP Brandon Gibson, abundance manager at Gibson Wealth Management. “Don’t just do rough math based on the capital gains brackets.”

Plus, encouraging your income can trigger other “tax side effects,” such as higher Social Security taxes, increased Medicare inducements or eligibility for marketplace health insurance subsidies, he said.