0% Capital Gains Bracket 2026: How Much Gain You Can Harvest

Harvesting a gain means selling an appreciated holding in a year when the federal rate on the gain is 0%, then holding it again at the higher cost basis. Our page on capital gains tax on real estate in 2026 lists the 0%, 15% and 20% thresholds and a single $60,000 example; this page does the other half, which is how much room a particular household has once the deduction, Social Security, dividends and the health-insurance credit are counted. The harvesting of losses is a different subject, covered in our guide to real estate crowdfunding tax loss harvesting.

The ceiling is taxable income. Your room is gross income.

Section 4.03 of Rev. Proc. 2025-32 gives the “maximum zero rate amount”. Under 1(h)(1)(B), the 0% applies to the adjusted net capital gain up to the point where taxable income reaches that amount. Taxable income is what is left after the standard deduction, so the room in adjusted gross income (AGI) is larger. The table adds the 2026 deductions to the ceilings.

Source: Rev. Proc. 2025-32 sections 4.03 and 4.14(1) and (3); 26 U.S.C. 151(d)(5)(C). The table assumes the standard deduction, no itemizing and no other deduction such as the section 199A deduction on REIT dividends, each of which would add room. The senior deduction of $6,000 per qualified person falls by 6% of MAGI above $75,000 ($150,000 joint); the single 65-and-older and joint rows end below those lines, so it is whole in both. A head of household aged 65 or more would cross $75,000 and lose part of it, so we left that row out. Our senior deduction page has the phase-out.

Two details matter. First, the zero-rate ceiling sits inside the 12% bracket: that bracket runs to $100,800 joint and $50,400 single (section 4.01), so the zone ends $1,900 and $950 before the 12% bracket does (our arithmetic). Second, the zone is shared. The statute’s “adjusted net capital gain” is net capital gain, less unrecaptured section 1250 gain and 28-percent rate gain, “plus” qualified dividend income. A couple with $6,000 of qualified dividends has $6,000 less room for a sale, and the depreciation part of a gain on real estate is outside the 0% rate. Our tax brackets page explains which fund and REIT payouts are qualified.

Social Security makes each dollar of gain use more of the zone

A gain raises AGI, and AGI feeds the formula in 26 U.S.C. 86 that decides how much of a Social Security benefit is taxable. The formula uses modified adjusted gross income plus one-half of benefits. On a joint return the base amount is $32,000 and the adjusted base amount is $44,000 (single: $25,000 and $34,000). Between them, 50% of the excess is included; above the adjusted base amount, 85% of the excess, with an overall cap of 85% of benefits. Neither number is indexed.

Source: 26 U.S.C. 86(a)(1), (a)(2), (b)(1) and (c). The 50% tier is also limited to one-half of benefits; the zone-use figures are our arithmetic.

Worked case A: a married couple, both 65, with $40,000 of benefits

(Our arithmetic.) A couple on a joint return, both over 65, receive $40,000 of Social Security and have $20,000 of other ordinary income (interest, pension) and no qualified dividends. They take the standard deduction with the extra $3,300 ($35,500) and the senior deduction of $12,000 (their AGI stays under $150,000 until the last row). They harvest different amounts of long-term gain.

Source: our arithmetic from Rev. Proc. 2025-32 sections 4.01, 4.03 and 4.14, 26 U.S.C. 1(h), 86 and 151(d)(5)(C). The $650 is 10% of $6,500 of ordinary taxable income, all of it Social Security. In the last row the senior deduction begins to phase out (AGI above $150,000), adding $240 of taxable income.

Three things stand out. The couple pays nothing until the gain passes about $29,300, because the deductions of $47,500 cover their own income and the benefits taxed so far. The tax stops growing at $650 once benefits are 85% taxable, which happens at a gain of $36,942. And the room ends at a gain of $92,400, not $126,400: without benefits, $20,000 of income plus a $126,400 gain would reach the $146,400 ceiling, and with $34,000 of taxable benefits in the same AGI the gain has $34,000 less space (our arithmetic). An estimate that skips the benefits overstates room by exactly that amount, and every dollar past the zone costs 15%.

Worked case B: a couple under 65 with no benefits

(Our arithmetic.) A couple on a joint return, both under 65, have $40,000 of ordinary income and no Social Security. The ceiling in AGI is $131,100, so they can realize a gain of $91,100. Their federal income tax stays at $780, all of it 10% of $7,800 of ordinary taxable income, up to a gain of $91,100; at a gain of $100,000 it is $2,115. The extra $1,335 is the 15% rate on the $8,900 past the zone. If the shares were later sold above the zone, the $91,100 of gain would have cost up to $13,665 at 15%, which is the most the harvest can save at the federal level.

That saving needs a later taxable sale. Under 26 U.S.C. 1014(a) the basis of property from a decedent is “the fair market value of the property at the date of the decedent’s death”, so shares held until death get a new basis anyway. Harvesting matters for money the owner expects to sell or give away, not for money meant to pass at death.

What else reacts to the gain

Source: as listed. Household income for the credit is MAGI, which adds untaxed Social Security and tax-exempt interest to AGI (26 U.S.C. 36B(d)(2)(B)). Section 36B(c)(1)(A) removes the 400% limit only for years before 2026. The size of the credit that disappears depends on the benchmark plan premium in your county; our ACA cliff page shows how to read it, and our IRMAA page and net investment income tax page cover the other two.

So the question for a retiree on Medicare is mostly Social Security, while for a retiree under 65 who is buying marketplace coverage the cliff is the line, and a couple who plans the harvest from the zone ceiling can overshoot the cliff by $46,500 (our arithmetic). The head-of-household case runs the other way, because the poverty line for three people is large.

Shares that are hard to sell: private funds and non-traded REITs

A harvest needs a sale. Under 26 U.S.C. 1001(c) “the entire amount of the gain or loss” on a sale or exchange is recognized, and nothing is recognized by a price rising on a statement. For listed shares and ETFs that is easy, and 26 U.S.C. 1091 does not stop an immediate repurchase, because it denies a deduction for “any loss claimed to have been sustained”, not a gain being taken. A holding in a non-traded REIT, an interval fund or a private fund is different: whether and when units can be redeemed depends on the vehicle, so the zone may be open in a year when no sale is possible. A partnership K-1 can also push a long-term gain onto your return without any sale of yours, and it fills the zone first. Our pages on each vehicle give its redemption terms.

Giving shares to an adult child

A parent in a high bracket can give appreciated shares to a child who is in the zone. Three rules apply. The basis carries over: “the same as it would be in the hands of the donor” (26 U.S.C. 1015(a)), and the holding period carries over with it (1223(2)). The gift tax annual exclusion for 2026 is $19,000 per recipient (Rev. Proc. 2025-32 section 4.42). And the kiddie tax of 26 U.S.C. 1(g) taxes a child’s unearned income at the parent’s rate if the child is under 18, or is 18 to 23 and a student whose earned income is not above half of their support; the 2026 threshold amount is $1,350 (section 4.02). Our kiddie tax page goes through it. A child outside those age and support tests who is within the zone pays 0% on the sale (our reading).

What a reader can do with this

• Find your AGI room. Take the zone ceiling for your filing status, add your deductions (standard, extra at 65, senior), then subtract your ordinary income and qualified dividends. That is the first estimate of the gain that stays at 0%.
• Add Social Security if you receive it. Use the tiers in the second table: a dollar of gain may use $1.50 or $1.85 of room. Run the 86 formula on the AGI you expect, not on last year’s.
• Check the cutoff before the zone if you buy coverage on the marketplace. For two people it is $84,600; one dollar over takes the credit for the year, and the credit lost depends on your own plan prices.
• Work out what you would sell. Check whether the gain is from a held-over-a-year holding, from depreciation recapture (not eligible for 0%), or from a vehicle that does not allow a sale this year.
• Keep the 2027 figures in mind. The 2027 revenue procedure had not been published when we checked on October 27, 2026; the thresholds are indexed, so the numbers here are for tax year 2026 returns only.
• Run the numbers with your actual return. State income tax, the section 199A deduction, itemized deductions and credits change the room; the tables here assume the standard deduction.

This is analysis of public documents, not investment, legal or tax advice.

Frequently asked questions

Sources: Rev. Proc. 2025-32 (IRS, sections 4.01, 4.02, 4.03, 4.14 and 4.42); Rev. Proc. 2025-25 (IRS, applicable percentage table for 2026); 26 U.S.C. 1, 86, 151, 1001, 1014, 1015, 1091, 1223, 1411 and 36B (Legal Information Institute text); HHS poverty guidelines for 2025 (90 Federal Register, document 2025-01377); SSA POMS HI 01101.010 (December 2, 2025). All worked cases are our arithmetic and are in the CSV. Compiled by CrowdfundedWealth on October 27, 2026.