The IRS recently unveiled the new income tax thresholds for capital gains in 2025, reflecting adjustments for inflation.
These changes (which will apply to tax returns you'll normally file in 2026) could have significant implications for taxpayers, particularly those with investment income.
So, let's break down the new numbers and compare them to the 2024 thresholds.
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New 2025 capital gains tax thresholds
For 2025 (returns normally filed in early 2026), the long-term capital gains tax rates remain at 0%, 15%, and 20%, but the income thresholds have shifted.
Remember that short-term capital gains (assets held for one year or less) are taxed at ordinary income tax rates, different from those for long-term capital gains.
For more information on capital gains rates, see Capital Gains Tax Rates for 2024 and 2025.
The new brackets are as follows:
0% Rate:
Single filers: Up to $48,350
Married filing jointly: Up to $96,700
Head of household: Up to $64,750
15% Rate:
Single filers: $48,351 to $533,400
Married filing jointly: $96,701 to $600,050
Head of household: $64,751 to $566,700
20% Rate:
Single filers: Over $533,400
Married filing jointly: Over $600,050
Head of household: Over $566,700
Comparison to 2024 thresholds
Compared to 2024, these numbers reflect about a 2.8% increase across all brackets and filing statuses. It's worth noting that while the percentage increases might not seem significant, they can translate into notable dollar amounts.
For instance, the near 2.8% increase in the 20% rate threshold for married couples filing jointly represents an additional $16,300 of income that can be taxed at the lower 15% rate in 2025 compared to 2024. (2024 threshold: $583,750/2025 threshold: $600,050)
These adjustments also offer a slight advantage for some at the lower end of the bracket thresholds.
For example, married couples filing jointly can now realize up to $2,650 more in capital gains at the 0% rate in 2025 compared to 2024. (2024 threshold: $94,050/2025 threshold: $96,700)
Leveraging the 0% capital gains rate
The new 0% capital gains rate threshold for 2025 creates some opportunities for some investors.
- For example, If your income varies yearly, you might consider realizing long-term capital gains in years when your total taxable income is below the 0% threshold.
- That way, you could take advantage of the lower tax rate.
- Also, depending on your situation, offsetting your capital gains with any losses you may have incurred (tax loss harvesting) could help.
Whatever you do, evaluate all your projected income sources each year, not just capital gains.
Long-term capital gains tax: Bottom line
As Kiplinger has reported, these capital gains tax income threshold adjustments come alongside annual inflation-adjusted changes to the 2025 federal income tax brackets, the standard deduction for 2025, and several other key tax provisions.
The various shifts offer some advantages, like having more income taxed at lower rates, providing some buffer against inflation, and allowing for additional tax planning opportunities in some cases.
But don’t forget state taxes on capital gains, which can impact overall tax liability.
And as always, consult a qualified and trusted tax professional to help manage your capital gains tax liability.
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