Capital gains tax 2027: income ceiling at 0%

The IRS has released capital gains tax brackets for 2027, which include a six-figure income limit for the 0% rate for married couples.

If you want to sell profitable investments in brokerage accounts, higher income thresholds for the 0% rate could help lower your tax bill, experts say.

“The 0% capital gains bracket is by far one of the most overlooked strategies for obtaining tax-free income,” said Stephen Maggard, a certified financial planner at Abacus Planning Group in Columbia, South Carolina.

But it’s important to know how tax brackets work and the possible tradeoffs before selling investments.

Despite recent stock market volatility, many investors are realizing gains in their portfolios after years of market growth. At the close of the market on November 9, the S&P500 was up about 10% year to date. The index also returned over 16% in 2025 and over 23% in 2024.

If you’re considering taking advantage of the 0% capital gains bracket in 2027 to sell or rebalance assets in your brokerage accounts, here are some key things to know.

Capital gains brackets — with rates of 0%, 15% or 20% — apply to assets held for more than a year, called long-term capital gains. On the other hand, investments held for one year or less constitute short-term gains, subject to regular income tax rates.

Your rate depends on taxable income, which you calculate by subtracting the greater of the standard or itemized deductions from your adjusted gross income, or AGI. Taxable income also includes any gains from investments that year.

The standard deduction will increase to $16,600 for single taxpayers and $33,200 for married couples in 2027.

For example, let’s say a married couple’s AGI is $130,000 for 2027, including capital gains. After subtracting the standard deduction of $33,200, their taxable income would be $96,800, which falls below the 0% threshold.

However, taxable income should include mutual fund distributions, which can “significantly change year-end planning projections” and increase taxable income, according to CFP Jim Guarino, managing director at Baker Newman Noyes in Woburn, Massachusetts. He is also a chartered accountant.

If your federal taxable income is above the 0% threshold, you will pay 15% on the portion of investment gains that exceeds the 0% limit, up to that bracket’s cap. Earnings above this amount may be taxed at 20%.

Additionally, the 0% capital gains bracket applies to federal taxes, but your profits could still be subject to state-level taxes, experts say.

As income limits increase for the 0% capital gains bracket due to IRS inflation adjustments, more investors could benefit from tax-saving opportunities, experts say.

“There’s a lot of planning to do here,” especially for low-income pre-retirees, according to CFP Dinon Hughes, a partner at Nvest Financial in Portsmouth, New Hampshire.

One strategy, known as “tax-gain harvesting,” involves selling profitable brokerage account assets during low-income years to take advantage of the 0% bracket, he explained. Keep in mind that these sales are added to your other income, which could push taxable income above the 0% threshold.

You can also sell the asset and buy it back immediately to “reset the cost basis,” or the original purchase price, said CFP Charles Sachs, chief investment officer of Imperio Wealth Advisors in Coral Gables, Florida.

By resetting the cost basis to current market value, you can reduce future capital gains to reduce your tax bill.

When selling assets at a loss, the “wash sale rule” blocks tax-loss harvesting when you repurchase an “essentially identical” asset within 30 days before or after the sale. But the same rule does not apply when collecting winnings.

Managing capital gains is only part of annual tax planning, according to Guarino of Baker Newman Noyes.

Before selling investments, you should know what impact strengthening AGI could have on your broader financial plan, including phasing out income for various tax breaks, he said.

For example, a modified adjusted gross income can impact a range of tax benefits, such as health insurance premium subsidies under the Affordable Care Act, which can disappear once income exceeds federal limits, even by a single dollar.

Another example is President Donald Trump’s temporary $6,000 senior “bonus” deduction, which is worth up to $12,000 per year for married couples through 2028.