Financial modelers predict a perfect storm of opportunity for investors. Due to changes made in Donald Trump’s tax bill last year, they can sell profitable assets without having to pay taxes on them. The 0% capital gains bracket allows individuals to strategically manage their investments, particularly in 2025 when new deductions will broaden eligibility criteria.
The new 0% capital gains rate is kicking in right now! This would allow people to sell assets they have held for more than one year without paying any capital gains taxes. Tommy Lucas, CFP, is a certified financial planner based in Sacramento, Calif. He refers to this situation as a “golden opportunity” for investors looking to supercharge their financial plans. This tax advantage enables investors to leverage long-term capital gains, which are classified into three brackets: 0%, 15%, or 20%, depending on the taxpayer’s income.
Under current law, in 2025, single filers with income of no more than $48,350 will be eligible for the long-term capital gains 0% rate. Furthermore, married couples filing jointly with taxable income at or below $96,700 will see this same benefit from this provision. We’re thankful that the tax bill did some pretty big things for WAVs. It has a higher standard deduction and a temporary older American’s deduction of $6,000 that make more people eligible for the 0% tax bracket.
Investors should take advantage of the opportunity for “tax-gain harvesting,” enabling them to sell high-value assets when their income is lower. Jared Gagne, another certified financial planner, emphasizes that this period presents a “perfect window to trim concentrated positions or rebalance portfolios tax-free.” Andrew Herzog, a certified financial planner, reminds us that some investors plan around taking advantage of selling investments that qualify for the 0% bracket. Then, in rapid succession, they repurchase these same assets to establish an entirely new cost basis, or original purchase price.
It is essential to note that while the 0% capital gains bracket applies to many investors with lower taxable incomes, a 3.8% surcharge may affect higher earners. This surcharge, when stacked on top of other taxes, means for some people the effective capital gains tax rate can be as high as 23.8%.
Financial planners are telling their clients to take advantage of this once-in-a-lifetime opportunity. They further stress that the changes made by Trump’s tax bill place them in line for great savings. Six new, alternative deductions have been added, making this a golden opportunity for investors. By strategically taking advantage of the 0% capital gains bracket, they can better optimize their taxable portfolios and lower their tax burdens.