How to use the 0% capital gains tax brackets in 2025 by income level

Wait I'm still confused. Let's say I'm single making $35k a year. If I sell stock with $50k in gains (that I've held for years), would I pay 0% on the first $13,100 of gains ($48,100 - $35,000) and then 15% on the remaining $36,900? Or am I misunderstanding how this works?

You've got it exactly right! If your regular income is $35,000 and you sell stock with $50,000 in gains, you would pay 0% on the first $13,100 of those gains (the amount that fills your bucket up to the $48,100 threshold). Then you would pay 15% on the remaining $36,900 of gains that exceed the threshold. This is what makes tax planning so important - if you can spread those stock sales across multiple years, you might be able to keep more of your gains in the 0% bracket.

Do they actually look at your specific investments or is it more general advice? I'm trying to figure out if I should sell my Amazon shares that I've had since 2015 or my newer Tesla shares from 2020 first.

I'm skeptical about these tax tools. How does it compare to just talking to a CPA? I paid mine $300 last year for basically the same advice.

They actually analyze your specific investments if you upload your documents. It helped me decide which specific stocks to sell first based on my cost basis and holding periods to maximize that 0% bracket. For the CPA question, I've used both, and while CPAs are great, this was way more affordable and I could run different scenarios instantly to see how various selling strategies would affect my taxes. I still use my CPA for complicated stuff, but for capital gains planning this was much more flexible.

How does this actually work? Do they just call and wait on hold, then call you when someone answers? Seems weird that this service even needs to exist.

Sounds like a scam honestly. The IRS wait times are bad but I can't believe anyone would pay for something like this when you can just keep calling yourself or use the IRS website.

They use an automated system that waits on hold for you, then calls your phone when an IRS agent picks up. You don't have to sit listening to hold music for hours. I get the skepticism, but after trying to call the IRS myself for three days and never getting through, this saved me a ton of frustration. The IRS website doesn't address specific questions about your personal situation like an agent can. Sometimes you just need to talk to a real person about your specific tax scenario.

Can you share the link to that calculator? I've been looking all over the IRS site and couldn't find one specifically for capital gains planning.

I should have been more specific - it wasn't directly on the IRS site but one of their approved partners. Just search for "tax capital gains calculator" and look for the results that reference the IRS. The basic strategy works like this: calculate your expected income minus deductions for the year, subtract that from the threshold ($48,100 for singles in 2025), and that's approximately how much in capital gains you can realize at 0%. Just remember that state taxes might still apply depending on where you live.

This is such an important point! I'm in Washington state and we have no state income tax, so the federal 0% bracket really means 0% for me. Makes a huge difference in retirement planning.

Thanks for bringing this up! I wasn't even aware of this Medicare surtax. I'm nowhere near those income levels right now, but it's good to know for future planning. Do you know if this surtax applies to all investment income or just certain types?

It applies to all investment income - capital gains, dividends, interest, rental income, etc. It's officially called the Net Investment Income Tax (NIIT). It's especially important for people who might have a one-time large income event, like selling a business or investment property. You might not normally be near the threshold, but a big sale could push you over it for that year.

Yes, qualified dividends are taxed at the same rates as long-term capital gains, so they would count toward your total taxable income when determining which bracket you're in. If you're receiving significant dividends throughout the year, those could definitely push you out of the 0% bracket even before you sell any stock. This is why it's important to look at your whole tax picture when planning. I learned this the hard way when I forgot to account for the dividends from my index funds - thought I had more room in the 0% bracket than I actually did. Now I track all my investment income throughout the year to better time any stock sales. Your point about timing is spot on too. Even something like selling in December vs January can make a big difference in which tax year the gains hit.

This is such valuable information! I had no idea about the stepped-up basis rule for inherited stock. My dad passed away last year and left me some Apple shares he bought in the 1990s. I was dreading the massive tax bill I thought I'd face when I eventually sell them, but it sounds like the basis would reset to their value when he died, not what he originally paid decades ago. Do you know if this applies to all types of inherited investments, or just stocks? I also inherited some mutual funds and a small rental property. This could completely change my tax planning strategy if the stepped-up basis applies broadly. Thanks for sharing this - it's exactly the kind of detail that can save people thousands in taxes!

@NebulaNomad Yes, the stepped-up basis rule applies to most inherited assets, including stocks, mutual funds, and real estate! This is a huge tax benefit that many people don't realize they have. For your dad's Apple shares, you're exactly right - the cost basis would reset to whatever Apple was trading at on the date of his death (or an alternate valuation date), not what he paid in the 1990s. Same goes for the mutual funds. The rental property also gets stepped-up basis, so if he bought it years ago for $100k and it was worth $300k when he passed, your basis would be $300k, not his original purchase price. This is why inherited assets are sometimes called "the best kind of capital gains" - you essentially get to skip paying taxes on all the appreciation that happened during the original owner's lifetime. It's definitely worth getting professional appraisals done for the date of death values to establish your new basis properly. Keep all that documentation - you'll need it when you eventually sell!

Great questions! For your first question about buying back the same stock after selling - you're thinking of the wash sale rule, but that actually works in reverse. Wash sale rules prevent you from claiming a tax LOSS if you buy back the same security within 30 days. Since you're selling for a gain (not a loss), wash sale rules don't apply. You can absolutely sell your Microsoft shares to capture gains in the 0% bracket and buy them right back if you want to maintain the position. For timing, I've found it's better to plan early but stay flexible. I usually do a rough calculation in January based on expected income, then monitor throughout the year. Dividends and other investment income can add up, so I track those quarterly. By October/November, I have a pretty clear picture and can make final decisions about which stocks to sell before year-end. One tip: if you're right at the edge of a bracket, consider whether you can adjust other income items too. Sometimes contributing more to a 401k or making charitable donations can give you a bit more room in that 0% capital gains bracket. It all works together!

Thanks for sharing your real-world example! This is exactly the kind of practical insight that helps newcomers like me understand how these rules actually work in practice. I'm in a similar situation - single filer with around $45,000 in regular income - and I was making the same mistake of not accounting for my dividend income throughout the year. Your spreadsheet idea is brilliant! I've been trying to figure out the best way to track this stuff without getting overwhelmed. Do you update it monthly or just when you receive dividend payments? I'm thinking of setting up something similar since I have dividends coming in from several different funds and it's easy to lose track of the running total. It's also really helpful to see the actual numbers - $2,800 in dividends making such a big difference in your available 0% bracket space really drives home how important it is to track everything. I probably would have made the same oversight and been surprised by a bigger tax bill than expected.

@Admin_Masters I update my spreadsheet whenever I receive any investment income - so quarterly for most dividends, but also when I get interest payments or sell any positions during the year. I found that waiting until monthly updates meant I sometimes forgot smaller amounts. Here's what I track: date, source (which fund/stock), type (dividend/interest/capital gains), and amount. Then I have a running total column that adds everything up. It takes maybe 5 minutes each time I get a payment, but it's saved me from some expensive mistakes! One other thing I learned - if you use a brokerage like Schwab or Fidelity, they usually have year-to-date summaries in your account that show total dividends received. That can be a good double-check against your own tracking. I wish I had known about that feature earlier - would have saved me from manually adding up all those quarterly statements last year.

@Giovanni Ricci Since you re'in Texas with no state income tax, you re'in a great position! I d'definitely focus on the federal brackets first since that s'where all your tax liability will be. You can basically ignore the state tax complications that others have mentioned. The tracking system approach is smart - I wish I had started doing that earlier in my investing journey. One thing to add to your planning: if you re'holding Apple and Google for 3+ years, you might want to check if either has done any stock splits during that time. Stock splits can affect your cost basis calculations, and you want to make sure you re'calculating your actual gains correctly when planning which shares to sell. Since you mentioned rebalancing, that s'actually a perfect opportunity to use the 0% bracket strategically. You can sell your winners the (stocks that have appreciated to) capture gains at 0%, then use those proceeds to buy into whatever asset classes you want to increase. It s'like getting a free rebalance from a tax perspective as long as you stay within that bracket limit. The bucket analogy really is the key - once you start thinking about it that way, the whole system makes much more sense than trying to calculate everything separately.

@Anastasia Kozlov Welcome to the community! Your question about which positions to sell first is really important for maximizing both tax efficiency and investment strategy. From my experience, I ve'found it s'better to prioritize the tax benefits first, especially when you re'in the 0% bracket. Here s'why: you can always buy back the same positions immediately after selling since (wash sale rules don t'apply to gains ,)so you don t'have to sacrifice your investment strategy to get the tax benefits. For example, if your Tesla shares have the highest gains, sell those first to maximize your use of the 0% bracket, then immediately buy them back if you want to maintain that position. This way you ve'harvested "the" gains at 0% tax rate and reset your cost basis higher, which could help with future tax planning. The key is to think of it as tax "gain harvesting -" you re'locking in gains at favorable rates while maintaining your desired portfolio allocation. Just make sure to account for any trading fees when doing this, though most brokers have eliminated those for stock trades these days. Your $1,900 in dividends discovery is a perfect example of why this tracking is so crucial. You probably have around $5,200 left in your 0% bracket space $48,100 (- $41,000 - $1,900 ,)which is still meaningful room for strategic selling!