With the stock market hanging around record highs, there could be notable benefits for those with taxable brokerage accounts.
When you sell assets that you’ve held for more than a year, you may be subject to the Capital Gains Tax, which is determined by your taxable income and could be at rates of 0%, 15%, or 20%. There’s also an extra 3.8% charge for higher earners, bringing the maximum effective rate to 23.8%.
Interestingly, many investors might not realize they qualify for the 0% capital gains rate. This could be a chance to gain profits without incurring tax liabilities.
By the way, Andrew Herzog is a certified financial planner and associate wealth manager at Watchman Group in Plano, Texas.
In other personal finance news, “quiet cracks” at work are just as problematic as a “quiet stop,” according to a recent report. Also, it turns out only 18% of investors are utilizing a retirement option that offers tax-free growth.
Regarding tax legislation, President Trump’s “Big Beautiful Bill” didn’t alter the capital gains rate. However, it might provide a new deduction in 2025 that could reduce taxable income, thereby increasing eligibility for the 0% bracket, according to experts.
Here’s what investors ought to know about this long-term capital gains bracket for 2025:
Who will be in the 0% Capital Gain Bracket in 2025?
In 2025, if your taxable income is $48,350, you’ll fall into the 0% long-term capital gains category. For single filers, and married couples filing jointly, the threshold is under $96,700.
However, many are overlooking the distinction between gross income and taxable income. Tommy Lucas, a CFP at Moy Sand Fitzgerald Tamayo in Orlando, Florida, noted that this gap may grow with the new spending package.
Your taxable income is calculated by deducting larger expenses from the standard or itemized deductions off your Adjusted Gross Income.
The standard deduction under Trump’s law has increased: it’s now $15,750 for single filers and $31,500 for married couples in 2025.
For instance, if a married couple earns $120,000 and deducts the standard deduction of $31,500, their taxable income would be $88,500. This gives them some leeway to realize 0% gains before hitting the $96,700 cap.
“Game Changer” for older investors
There are also temporary benefits under Trump’s policies, such as a $6,000 tax credit for Americans over 65, or $12,000 for married couples. Benefits will surpass $75,000 when adjusted gross income is considered for single filers or jointly for married filings.
Additionally, new tax cuts will include increased standard deductions for those over 65 or for blind individuals.
Lucas mentioned that the eligibility for the $12,000 deduction could be a “game changer” for many married couples.
He feels that selling some assets under the 0% capital gains tax or exploring other tax strategies is an excellent opportunity.
Herzog remarked that investors might utilize the 0% capital gains bracket to lower future taxes based on the original purchase price of their assets.
“Selling assets tax-free is possible,” he noted, “and then you can buy them back right away, resetting your basis.”
