Let’s talk about capital gains tax rates for 2025. I know, I know… tax talk can be about as exciting as watching paint dry. But stick with me because this one matters. If you own stocks, real estate, or any investment that could make you money, this is for you.
First, What Are Capital Gains?
If you sell something for more than you paid for it, you have a capital gain. Simple, right? The IRS, being the ever-curious entity that it is, wants a cut of that profit. How much? Well, that depends on how long you held the asset.
- Short-term capital gains (held less than a year) get taxed like your ordinary income. Ouch.
- Long-term capital gains (held over a year) enjoy lower tax rates. Yay!
What’s Changing in 2025?
Now, here’s the big question: Will capital gains tax rates go up in 2025? As of now, there are rumors and political chatter, but no confirmed law changes. However, tax rates can shift depending on who’s in charge and what new laws get passed.
For now, the 2024 long-term capital gains tax rates look like this:
- 0% if your taxable income is under $47,025 (single) or $94,050 (married filing jointly).
- 15% if your taxable income is between $47,026 – $518,900 (single) or $94,051 – $583,750 (married filing jointly).
- 20% if your taxable income is above $518,900 (single) or $583,750 (married filing jointly).
If changes come, they’ll likely affect the 15% and 20% brackets, especially for higher earners. Some proposals have suggested raising the top rate or tweaking income thresholds. The government likes to keep us on our toes.
What Should You Do?
Since tax laws can change overnight (okay, not literally, but it feels like it), here’s how you can prepare:
- Hold onto assets longer – If possible, keep investments for at least a year to get the lower long-term rates.
- Consider tax-loss harvesting – Sell off some losers to offset gains and pay less tax overall.
- Use tax-advantaged accounts – IRAs and 401(k)s can help defer or avoid capital gains tax entirely.
- Keep an eye on legislation – If changes come, you want to act fast to minimize your tax bill.
- Talk to a tax pro – (Like us! Shameless plug.) We help clients navigate tax strategy and save money.
The Bottom Line
No one loves paying taxes. But knowing what’s coming helps you keep more of your money. If 2025 brings changes, we’ll be ready. If nothing happens, well, at least you’re informed and ahead of the game.
Want to strategize and keep Uncle Sam from taking more than necessary? Let’s talk. We’ll help you plan smarter, not harder.
