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The IRS has announced its 2027 capital gains tax brackets, which include a six-digit income limit for 0% tax rates for married couples.
Experts say setting a higher 0% income threshold could reduce your tax burden if you want to sell your profitable brokerage account investments.
“The 0% capital gains threshold is one of the most overlooked strategies for earning tax-free income,” says Stephen Maggard, a certified financial planner with Abacus Planning Group in Columbia, South Carolina.
However, before selling your investments, it’s important to know how the tax brackets work and the possible trade-offs.
Despite recent stock market volatility, many investors are seeing gains in their portfolios after years of market growth. As of the market close on November 9th, S&P500 Year-to-date, it’s up about 10%. The index’s return was also more than 16% in 2025 and more than 23% in 2024.
If you’re planning to sell or rebalance your brokerage account assets to take advantage of the 0% capital gains allowance in 2027, there are some important things to know.
How the 0% capital gains bracket works
The 0%, 15%, or 20% capital gains bracket applies to assets held for more than one year, known as long-term capital gains. In contrast, investments lasting one year or less are short-term gains and are subject to ordinary income tax rates.
Tax rates are determined by taxable income. Taxable income is calculated by subtracting the greater of your standard deduction or itemized deductions from your adjusted gross income (AGI). Taxable income also includes gains from investments during the 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 couple’s AGI in 2027 is $130,000, including capital gains. After deducting the standard deduction of $33,200, your taxable income would be $96,800, which is below the 0% threshold.
But taxable income should also include mutual fund distributions, which can “significantly change year-end planning expectations” and increase taxable income, said CFP Jim Guarino, managing director at Baker Newman Noyes in Woburn, Massachusetts. He is also a certified public accountant.
If your federal taxable income exceeds the 0% threshold, you will pay 15% on the portion of your investment income that exceeds the 0% threshold, up to the top of that bracket. Profits in excess of that may be subject to a 20% tax.
And while the 0% capital gains threshold applies to federal taxes, the gains could still be subject to state-level taxes, experts say.
0% bracket tax planning
Experts say the IRS’s inflation adjustment could raise the income limit for the 0% capital gains bracket, giving more investors the opportunity to save on taxes.
“There’s a lot of planning to do here,” especially for low-income early retirees, said CFP Dinon Hughes, a partner at Nvest Financial in Portsmouth, New Hampshire.
One strategy, known as “tax gain harvesting,” is to tap into the 0% bracket by selling profitable brokerage account assets during low-income periods, he said. Note that these sales overlap with other income and can cause your taxable income to exceed the 0% threshold.
You can also sell an asset and immediately repurchase it to “reset the cost basis,” or reset the original purchase price, said Charles Sachs, chief investment officer at Imperio Wealth Advisors in Coral Gables, Florida.
By resetting your cost basis to current market value, you can reduce future capital gains and reduce taxes.
If an asset is sold at a loss, the “wash sale rule” prevents the collection of losses when a “substantially identical” asset is repurchased within 30 days before or after the sale. However, the same rules do not apply when it comes to harvesting profits.
Weigh other tax benefits
Managing capital gains is just one part of annual tax planning, said Guarino of Baker Newman Noyes.
Before selling an investment, he said, you need to know how increasing your AGI could impact your broader financial planning, such as phasing out income through various tax breaks.
For example, your adjusted gross income can affect various tax benefits, such as the Affordable Care Act health insurance premium subsidy, which can disappear if your income exceeds the federal limit by even a dollar.
Another example is President Donald Trump’s temporary $6,000 senior “bonus” deduction, which would be worth up to $12,000 a year for married couples through 2028.
