Understanding the 2025 Capital Gains Tax Brackets by Income
I'm trying to wrap my head around the capital gains tax brackets for 2025. If my taxable income falls within the 0% capital gains tax rate threshold, does that mean I could potentially sell a bunch of stocks I've held for years and not pay any capital gains tax on the profits? I'm getting confused about what exactly counts as "taxable income" - specifically unearned income. When I sell stock, does that profit also count toward my unearned income calculation? From what I understand, taxable income includes both earned income (money from actual work/employment) and unearned income (interest, capital gains, dividends, etc.). For the 2025 tax year, I read that the 0% rate applies to people with taxable incomes up to $118,450 for joint filers, $79,300 for head-of-household filers, and $59,200 for single filers and married couples filing separate returns. But I'm not sure if I'm interpreting this correctly in terms of what I could potentially sell without triggering higher tax brackets.
20 comments
Join the conversation
Jayden Hill
The key to understanding capital gains tax is knowing that the profits from selling stocks (capital gains) are themselves part of your total taxable income. Here's how it works: First, calculate your taxable income WITHOUT including the capital gains. If that amount is below the 0% capital gains threshold for your filing status, then yes, you can sell some stock and the gains will be taxed at 0% - but only until your total taxable income (including those capital gains) reaches the threshold. For example, if you're single with $40,000 in taxable income before any stock sales, you have about $19,200 of "room" before hitting the $59,200 threshold. So you could realize up to $19,200 in capital gains and still pay 0% on those gains. Any gains beyond that would be taxed at the next bracket (likely 15%). Remember that when you sell stocks, those capital gains become part of your unearned income, which is included in your total taxable income calculation. It's not that you can sell unlimited amounts of stock tax-free just because your other income is below the threshold.
0 coins
LordCommander
•So just to make sure I understand - if I make $30,000 from my job, and I sell stocks with a profit of $20,000, I'd pay 0% capital gains tax on all of it since my total is $50,000 and still under the $59,200 threshold for single filers? And if I instead sold stocks with a $40,000 profit, I'd pay 0% on the first $29,200 of gains (to reach the $59,200 threshold) and then 15% on the remaining $10,800?
0 coins
Jayden Hill
•You've got it exactly right. With $30,000 in regular taxable income, you could realize up to $29,200 in capital gains while staying within the 0% capital gains tax bracket ($59,200 threshold for single filers). If you sold stock with a $40,000 profit, the first $29,200 would indeed be taxed at 0%, and only the remaining $10,800 would be taxed at the next bracket rate (15% for most people). This tiered approach is what makes tax planning with capital gains so powerful when done correctly.
0 coins
Lucy Lam
After struggling with capital gains taxes for years, I found this amazing tool called taxr.ai (https://taxr.ai) that completely changed how I handle my investments and taxes. Last year I was in a similar situation trying to figure out how much stock I could sell while staying in the 0% capital gains bracket. The tool analyzed all my tax documents and gave me a precise calculation of my "tax space" before hitting the next bracket. It actually found that I had been miscalculating my AGI by not accounting for some deductions, which meant I could sell more stock than I thought while staying in the 0% bracket! It also helped me understand the difference between qualified and non-qualified dividends and how they affect my overall tax situation differently than capital gains.
0 coins
Aidan Hudson
•Does it work for more complicated situations? I have some restricted stock units from my employer plus some crypto that I've been holding. Trying to figure out the optimal selling strategy across different types of assets is making my head spin.
0 coins
Zoe Wang
•I'm skeptical about tax tools. Does this actually connect to the IRS or is it just another calculator? And how accurate is it for state taxes? I live in California where they tax capital gains as regular income and it's a whole other headache.
0 coins
Lucy Lam
•It definitely handles complicated situations including RSUs and cryptocurrency. It actually has specialized analysis for equity compensation which helped me understand the tax implications of my different vesting schedules. It showed me how to time my sales to minimize my overall tax burden across both federal and state. For state taxes, it has specific calculators for all states including California. It showed me the difference between federal capital gains treatment and California's approach of taxing all income (including capital gains) at the same rates. It helped me see exactly how much extra I was paying to California compared to federal.
0 coins
Aidan Hudson
I tried taxr.ai after seeing it mentioned here and it was seriously eye-opening. I had no idea I was leaving so much money on the table with my investment strategy! I uploaded my previous tax returns and investment statements, and it immediately spotted that I could harvest some losses to offset gains. But the best part was discovering I could sell about $22,000 of my long-term investments without paying any capital gains tax due to my income level. The tool gave me a customized tax planning strategy that's already saved me thousands. The visualization of different tax brackets and how selling different assets would affect my overall tax burden made things crystal clear. Wish I'd found this years ago!
0 coins
Connor Richards
If you're struggling to get answers directly from the IRS about your specific capital gains situation, I highly recommend using Claimyr (https://claimyr.com). I spent WEEKS trying to get through to an IRS agent to confirm how the capital gains brackets would apply to my specific situation with inherited stocks. After multiple failed attempts, I used Claimyr and got connected to an actual IRS representative in under 15 minutes! You can see how it works here: https://youtu.be/_kiP6q8DX5c. The agent walked me through exactly how the step-up basis worked for my inherited stocks and confirmed which portions would qualify for the 0% capital gains rate. It completely changed my perspective on dealing with the IRS - I always thought it was impossible to get actual help from them.
0 coins
Grace Durand
•How does this actually work? I don't understand how some service can get you through to the IRS when their phone lines are always busy. Sounds too good to be true.
0 coins
Zoe Wang
•Yeah right. I've tried EVERYTHING to get through to the IRS. There's no way this actually works. I wasted hours on hold last year trying to ask about capital gains reporting for some stocks I inherited. I'll believe it when I see it.
0 coins
Connor Richards
•The service basically automates the calling process and navigates through the IRS phone tree for you. It keeps dialing and working through the system until it gets a human, then it calls you to connect. It's using technology to handle the frustrating part of getting through their system. I was skeptical too until I tried it. The difference is that I didn't have to personally sit on hold for hours. The system did all the work and only connected me once it had an actual IRS person on the line. My question about inherited stock basis was answered in one conversation, and the agent even emailed me documentation to confirm everything.
0 coins
Zoe Wang
I need to publicly eat my words. After being super skeptical about Claimyr, I decided to try it as a last resort before filing an extension. I had this complicated situation with stock from a company acquisition and needed clarification on which tax year certain gains should be reported. The service actually worked! Got me through to an IRS tax specialist in about 20 minutes (compared to my previous 2+ hour waits that ended in disconnection). The agent confirmed I was calculating my capital gains correctly and that I could indeed stay within the 0% bracket if I kept my other income under the threshold. That 20-minute call saved me potentially thousands in taxes by confirming I was eligible for the 0% rate on a significant portion of my gains. I'm genuinely shocked at how well this worked.
0 coins
Steven Adams
Don't forget about state taxes! The federal capital gains brackets are just part of the picture. I'm in Minnesota and we tax capital gains as ordinary income at our state tax rates, which can be as high as 9.85%. So even if you're in the 0% federal bracket, you might still owe significant state taxes on your capital gains. Check your state's rules before making any big selling decisions.
0 coins
Alice Fleming
•Do any states have preferential rates for capital gains similar to the federal government? I'm thinking about moving and this might actually factor into my decision about where to go.
0 coins
Steven Adams
•A few states do offer some breaks on capital gains. Washington state has no income tax at all. New Hampshire doesn't tax earned income but does tax investment income, though they're phasing that out. Montana gives a credit for capital gains that effectively lowers the rate. Most states just treat capital gains as regular income though. If tax treatment is a big factor in your move, look at states with no income tax at all: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming. That'll give you the best overall situation for investment income.
0 coins
Hassan Khoury
Has anyone used TurboTax to calculate capital gains taxes? I'm trying to figure out if it accurately handles the step-up in brackets when you have a mix of ordinary income and capital gains.
0 coins
Victoria Stark
•I use TurboTax every year and it does a decent job with capital gains. It walks you through entering all your income first, then your investment sales, and calculates the appropriate tax based on which bracket your gains fall into. It's actually pretty good about showing you which portion of your capital gains falls into each tax bracket (0%, 15%, 20%). There's even a feature that lets you play around with different scenarios to see how selling different amounts would affect your tax situation.
0 coins
Val Rossi
One thing that often gets overlooked when planning capital gains harvesting is timing throughout the year. I learned this the hard way when I sold a bunch of stock in December thinking I was staying in the 0% bracket, only to realize my year-end bonus pushed me over the threshold. The key is to track your running total of taxable income throughout the year, especially if you have variable income like bonuses, freelance work, or other irregular sources. I now use a simple spreadsheet to monitor where I stand relative to the capital gains brackets before making any major stock sales. Also worth noting - if you're married, make sure you're coordinating with your spouse's income too. We almost made a costly mistake one year when my wife got an unexpected promotion mid-year that changed our joint filing status calculations.
0 coins
Aisha Jackson
•This is such great advice about timing! I made a similar mistake last year by not accounting for my quarterly estimated tax payments properly. I thought I was safely in the 0% bracket but forgot that my freelance income was higher than expected in Q4. Do you have any recommendations for tracking tools or spreadsheet templates? I've been trying to build something myself but I'm worried I'm missing important income categories that should be included in the running total. Especially things like retirement account distributions or rental income that might not be as obvious. Also wondering - when you mention coordinating with your spouse, do you both track this separately and then combine, or do you have a joint system? We're newlyweds and still figuring out how to handle our taxes together.
0 coins