While the maximum capital gains tax rate can be as high as 23.8%, many pay 15%. But there is the possibility to have your capital gains go tax-free – yes, 0%!
You incur long-term gain if you sell stocks, bonds, or real estate you’ve owned longer than a year. For 2023, the 0% rate applies to single taxpayers with taxable income up to $44,625 or married filing joint up to $89,250.
The brackets refer to taxable income, which is after subtracting the standard deduction. For example, if a married couple earns $116,950 in 2023, their taxable income will equal $89,250 and any long-term capital gains in that total would qualify for the 0% rate.
In a year in which you expect lower income, whether due to job loss, retirement, or other situations, you may be able to harvest some long-term capital gains for free. Keep in mind that other factors, such as the taxability of Social Security Benefits often come into play. Give us a call to review your situation.
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