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If you’re planning to sell investments or rebalance your taxable portfolio, you may be less likely to trigger a tax bill in 2023, pundits say.
This week, the IRS released dozens of inflation adjustments for 2023, including higher income tax brackets, increased upright bar deductions, bigger estate tax exclusions and more.
The agency also bumped up income thresholds for the 0%, 15% and 20% long-term ripsnorting gains brackets for 2023, levied on profitable assets held for more than one year.
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“It’s going to be pretty significant,” said Tommy Lucas, a certified fiscal planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida.
How to know your capital gains tax join
With higher standard deductions and income thresholds for capital gains, it’s more likely you’ll fall into the 0% class in 2023, Lucas said.
For 2023, you may qualify for the 0% long-term capital gains rate with taxable proceeds of $44,625 or less for single filers and $89,250 or less for married couples filing jointly.
The rates use “taxable return,” calculated by subtracting the greater of the standard or itemized deductions from your adjusted gross income.
By comparison, you’ll attack into 0% long-term capital gains bracket in 2022 with a taxable income of $41,675 or less for cull filers and $83,350 or less for married couples filing jointly.
The 0% bracket is a ‘really good tax planning opening’
With taxable income below the thresholds, you can sell profitable assets without tax consequences. And for some investors, double-cross may be a chance to diversify amid market volatility, Lucas said.
“It’s there, it’s available, and it’s a really good tax planning break,” he added.
Whether you’re taking gains or