Donald Trump just signed the Transportation Act, which he’s renamed the “big beautiful bill.” Though it hasn’t raised capital gains tax rates, it offers important incentives for low- and middle-income households beginning in 2025. Under this law, those with taxable incomes of $48,350 and below are eligible for the newly established 0% long-term capital gains tax rate. Plus, married couples who file jointly and have incomes below $96,700 can benefit from this positive, low rate too. This provision provides an opportunity for a number of different investors to cash out on their profits without receiving a taxable event.
The 0% capital gains rate is for assets held more than one year. Therefore, for the 2025 tax year, capital gains taxes will still be 0%, 15% or 20%. The rate that you pay will be determined by just how much money you’re making. In any case, higher earners should be on the lookout for a new 3.8% surcharge on unearned income. That is enough to raise their combined effective rate up to 23.8%.
For single filers, that means their standard deduction will jump from $15,000 to $15,750. At the same time, married couples filing jointly will see an increase in their deduction to $31,500 from $30,000. Older Americans age 65 or older are eligible for a tax break worth $6,000. For married couples, this benefit doubles to $24,000, effectively letting them wipe out a considerable amount of taxable income.
We find that a staggering number of investors are still unaware that they are eligible to receive this powerful tax treatment. Andrew Herzog, a financial advisor, noted that “I’d say probably half of our clients are aware of it and understand the concept.” That lack of understanding could result in hundreds of thousands of taxpayers potentially losing out on savings.
To qualify for the 0% capital gains rate, single filers must ensure their modified adjusted gross income does not exceed $75,000. Likewise, married couples filing jointly completely lose this benefit if their income exceeds $150,000. This ever important threshold allows taxpayers to maximize their investment returns while minimizing their tax liability.
This is because the very structure of capital gains taxes incentivizes people to plan their investment strategies around them. In 2025, you’ll still have an opportunity to make money at a 0% tax rate. This new opportunity has the potential to be a powerful incentive for anyone whose annual income falls below the established thresholds. Investors need to assess their own legal and financial circumstances and figure out the best ways to benefit from this provision.