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The maximum capital gains tax rate can be quite high, but there is a way to cash in with zero percent tax. While most taxpayers pay a 15 percent maximum capital gains tax, there is a tax break that allows for tax-free maximum capital gains.
Maximum Capital Gains Tax Rate: How to Cash In With Zero Percent? (PHOTO: iMoney)
Maximum Capital Gains Tax Rate
This benefit has been available for more than a decade and can be more accessible than you might think.
To qualify for the zero percent maximum capital gains rate, you need to have long-term gains from selling assets like stocks, bonds, or real estate that you’ve owned for more than a year, The Willits News reported. In 2023, this rate applies to single taxpayers with taxable income up to $46,625 and married couples filing jointly with income up to $89,250.
You can enjoy the zero percent rate during a low-income tax year due to various reasons, such as temporary job loss, tax losses passed through from S corporations or partnerships, income fluctuations from commission-based jobs, retirement, or moving to part-time employment.
Interestingly, you might still qualify for the zero percent rate even with a higher income. For instance, a married couple earning $116,950 in 2023 can still take advantage of the zero percent rate by using the $27,700 standard deduction, which brings their taxable income down to the $89,250 threshold.
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Maximum Capital Gains
Awareness is crucial when it comes to leveraging the zero percent maximum capital gains rate. Knowing when this rate applies can significantly impact your financial decisions. For example, consider a couple who recently retired with an income of $58,700. If they sell mutual funds with $25,000 in maximum capital gains, they can enjoy the money tax-free by utilizing the zero percent rate.
As the year comes to a close, plan your tax moves wisely. Be aware of your projected income for the year and consider realizing maximum capital gains that are subject to no or lower tax rates. Keep in mind that other factors, such as the taxability of Social Security benefits, can also influence your overall tax situation. By staying informed and making strategic decisions, you can optimize your tax benefits and potentially enjoy tax-free maximum capital gains when the opportunity arises.
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