How to Utilize the 0% Capital Gains Bracket with Bitcoin's Price Increase

• Tax-gain harvesting can help reduce future taxes for those in the 0% long-term capital gains bracket, according to experts.
• In 2024, you can receive the 0% tax rate if your taxable income is $47,025 or less as a single filer or $94,050 or less as a married couple filing jointly.
• You can reset your "basis" to save on taxes by using the 0% bracket when purchasing cryptocurrency.

Experts suggest that crypto investors in the 0% capital gains bracket can reduce future taxes with a lesser-known strategy amid the surging price of Bitcoin.

Selling profitable crypto in a lower-income year is a tactic known as tax-gain harvesting. By leveraging the 0% long-term capital gains rate, you can avoid paying taxes on gains as long as they remain below a certain threshold. This applies to assets held for more than one year.

Andrew Gordon, a tax attorney, certified public accountant and president of Gordon Law Group, stated that the strategy is highly effective for that specific group.

You may be surprised to learn that the income limits for 0% capital gains tax are higher than you anticipated, according to Gordon.

In 2025, the tax brackets will be higher for single filers with taxable income of $47,025 or less and married couples filing jointly with taxable income of $94,050 or less.

Your taxable income would be calculated by subtracting the greater of the standard or itemized deductions from your adjusted gross income, including profits from a crypto sale.

In 2024, a married couple earning $125,000 together may have a taxable income below $94,050 after deducting the $29,200 standard deduction for joint filers.

Use the 0% bracket to reset your basis

According to Matt Metras, an enrolled agent and owner of MDM Financial Services in Rochester, New York, you can reset your "basis," or the original purchase price of crypto, by using the 0% capital gains bracket.

You can sell profitable crypto without triggering taxes and then repurchase the same asset to maintain your exposure.

Experts recommend conducting a tax projection to determine how additional income may affect your tax situation, including potential phaseouts of tax breaks.

Bitcoin's price was around $90,000, up over 100% year-to-date, and briefly hit a record of $93,000 during a post-election rally, as of the afternoon on Nov. 18.

While it is evident that predicting future price increases is challenging, some investors anticipate a rise under President-elect Donald Trump, who pledged pro-crypto policies during his campaign.