When Am I Eligible for the Zero Percent Capital Gains Tax Rate?
Jeffrey Levine of Buckingham Wealth Partners, aka “The Buckinghammer” explains how much you can make and still pay 0% in capital gains.
Key Takeaways
- The 0% long-term capital gains rate for 2022 applies only if your total taxable income (ordinary income + capital gains minus deductions) stays below $41,675 for singles or $83,350 for married couples
- Ordinary income is taxed first and fills up the lower tax brackets before any capital gains are taxed, so even large capital gains can be entirely subject to 15% or 20% rates if your ordinary income is high enough
- Don't assume all your long-term capital gains are tax-free just because the gains themselves are under the income threshold—layer in your ordinary income first to calculate actual taxable income
- If you have $60,000 in taxable ordinary income as a married couple, only your capital gains above $23,350 (to reach the $83,350 threshold) will be taxed at 15%; gains below that threshold qualify for 0%
- High-income earners ($200k+ single/$250k+ married) face an additional 3.8% surtax on net investment income, reducing long-term capital gains rates to 18.8%, 23.8%, or 26.8%
When Am I Eligible for the Zero Percent Capital Gains Tax Rate? In this episode of Ask The Hammer, Jeffrey Levine of Buckingham Wealth Partners, aka “The Buckinghammer” explains how much you can make and still pay 0% in capital gains.
According to the IRS, A capital gains rate of 0% applies if your taxable income is less than or equal to: $44,625 for single and married filing separately; $89,250 for married filing jointly and qualifying surviving spouse; and. $59,750 for head of household.
Watch this video to learn the answer to the question: When Am I Eligible for the Zero Percent Capital Gains Tax Rate? Find more episodes of Ask The Hammer at this link: https://www.finstream.tv/videos/ask-the-hammer/
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