📈 2025 Capital Gains Tax Brackets — What Every Investor Must Know This Year
The 2025 capital gains tax brackets have shifted due to inflation adjustments, and these changes can significantly impact how much tax investors ultimately owe.
Long-term capital gains are still taxed at 0%, 15%, or 20%, but the income thresholds for each bracket are noticeably wider than in previous years.
1️⃣ How Capital Gains Tax Works
Capital gains tax depends on how long you held the asset before selling it:
- Long-term gains (held 1+ years) → taxed at 0%, 15%, or 20%
- Short-term gains (held less than 1 year) → taxed as ordinary income
Your tax bracket isn’t based on the gain alone — it’s determined by your total taxable income, which includes wages, dividends, rental income, and other sources.
Because of this, long-term planning makes a significant difference in reducing tax.
When estimating your capital gains tax, always calculate your full taxable income, not just the gain itself. A small increase in income can move part of your gain into a higher bracket.
2️⃣ 2025 Long-Term Capital Gains Brackets
| Filing Status | 0% Bracket | 15% Bracket | 20% Bracket |
|---|---|---|---|
| Single | ≤ $48,350 | $48,350 – $533,400 | ≥ $533,400 |
| Married Filing Jointly | ≤ $96,700 | $96,700 – $600,050 | ≥ $600,050 |
| Head of Household | ≤ $64,750 | $64,750 – $566,700 | ≥ $566,700 |
| Trusts & Estates | ≤ $3,250 | $3,250 – $15,900 | ≥ $15,900 |
The expanded 0% and 15% brackets mean more investors can realize capital gains at a lower tax rate.
In particular, married couples filing jointly can earn up to $96,700 in taxable income and still pay 0% long-term capital gains tax.
Low-income or gap years — such as sabbaticals, career transitions, or early-retirement years — are ideal for realizing long-term gains at 0%.
3️⃣ Short-Term Capital Gains — Why the Rate Is Higher
Short-term gains occur when you sell an asset you held for less than a year.
The IRS treats this as ordinary income, meaning the tax rate follows your regular income bracket — which can be as high as 37%.
Here’s how dramatically the tax rate can differ:
- Long-term gain → typically 0%–20%
- Short-term gain → taxed at your income rate (10%–37%), plus possible surtaxes
Frequent traders often underestimate the impact of short-term gains. A high-earning taxpayer may lose over one-third of their profit to taxes simply because they sold too soon.
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4️⃣ Real-World Tax Calculation Examples
Status: Married Filing Jointly
Taxable income (2025): $90,000
Long-term capital gain: $12,000
Because the couple’s income is under $96,700, the entire gain is taxed at 0%.
Total tax owed: $0
Status: Single
Taxable income: $110,000
Long-term gain: $20,000
$110,000 falls within the 15% bracket.
Tax: $20,000 × 15% = $3,000
Profit: $10,000
Status: Single
Short-term (24% income bracket): $2,400 tax
Long-term (15% bracket): $1,500 tax
Difference = $900 saved simply by holding longer.
5️⃣ The 3.8% NIIT — Extra Tax for High-Income Investors
High-income taxpayers may owe an additional 3.8% Net Investment Income Tax (NIIT) on capital gains, interest, dividends, and certain other investment income.
- Single: MAGI above $200,000
- Married Filing Jointly: MAGI above $250,000
For affected taxpayers, the real long-term capital gains rate becomes 23.8%.
This surtax often applies unexpectedly to large sales of real estate, crypto, or stock positions.
6️⃣ Practical EA-Level Tax Planning Strategies
1) Realize gains during low-income years to use the 0% bracket.
2) Use tax-loss harvesting to offset gains and reduce taxable income.
3) Use Specific Identification when selling shares to reduce taxable gain.
4) Contribute to HSA, IRA, or Solo 401(k) to lower MAGI and stay in a lower bracket.
5) High-income investors should always check NIIT exposure.
6) Avoid wash sales when harvesting losses — disallowed losses cannot be deducted.