How to Utilize Higher Income Limits for the 0% Capital Gains Tax Bracket

• For 2025, the taxable income limit for the 0% capital gains bracket will be increased.
• There is an opportunity to earn profits or adjust brokerage account holdings without incurring a tax liability.
• But you need to project your complete tax situation first, experts say.

In 2025, the earnings limit for the 0% capital gains bracket will increase, potentially providing tax planning opportunities, according to financial experts.

At sale, assets owned for more than one year are eligible for lower taxes, referred to as long-term capital gains. The tax rates are 0%, 15%, or 20%, based on taxable income.

The IRS announced inflation adjustments for 2025, which include an increase in taxable income limits for the 0% capital gains bracket.

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In 2025, single filers with taxable income of $48,350 or less and married couples filing jointly with taxable income of $96,700 or less will both qualify for the 0% long-term capital gains rate.

You may be eligible for the 0% tax bracket if your earnings exceed your expectations. The taxable income calculation takes into account either the standard or itemized deductions from your adjusted gross income.

Financial experts advise investors to be aware of planning around the 0% capital gains bracket.

Weigh 'tax gain harvesting'

Ashton Lawrence, a certified financial planner and director at Mariner Wealth Advisors in Greenville, South Carolina, advised that if you're sitting on profitable investments, the 0% capital gains bracket could provide an opportunity for "tax gain harvesting."

Selling profitable brokerage account assets without triggering capital gains taxes is possible for investors in the 0% capital gains bracket.

Lawrence suggested that you could repurchase the same assets to reset your cost basis and save on future taxes.

Opt for tax-free rebalancing

To rebalance a brokerage account without incurring taxes, experts suggest leveraging the 0% capital gains bracket by purchasing and selling assets to achieve a desired asset mix based on goals and risk tolerance. According to George Gagliardi, a CFP and founder of Coromandel Wealth Management in Lexington, Massachusetts, investors should "take some of those gains off the table" before 2025 as the stock market experienced significant growth in 2024.

"Some of the largest companies in the market have experienced significant growth in the past few years, but it's important to remember that markets don't last forever," he said. Rebalancing your portfolio can help reduce risk and align your investments with your long-term goals amid future market volatility.

'Project your entire tax situation'

To save money, you should consider the 0% capital gains bracket, but you must accurately estimate your income, including the assets you plan to sell.

"Brandon Gibson, a wealth manager at Gibson Wealth Management in Dallas, emphasized the importance of considering both the tax implications with and without capital gains when projecting one's entire tax situation. He advised against relying solely on rough calculations based on capital gains tax brackets."

Boosting your income can result in various "tax side effects," including higher Social Security taxes, increased Medicare premiums, and eligibility for marketplace health insurance subsidies, according to him.