If your taxable income falls below $94,050 as a married couple (or $47,025 as a single filer) in 2026, the federal government charges you zero percent on long-term capital gains — meaning you can sell stocks, mutual funds, or ETFs that have grown in value and keep every dollar of profit, tax-free. This isn’t a loophole or a trick; it’s a deliberately designed bracket in the U.S. tax code, and millions of retirees qualify for it every year without ever taking advantage of it.

What exactly is the 0% capital gains bracket?

When you sell an investment you’ve held for more than one year, any profit is taxed as a “long-term capital gain.” The federal rate depends on your total taxable income — not your gross income, but the number after deductions. In 2026, the three long-term capital gains rates are 0%, 15%, and 20%. Most retirees living on a combination of Social Security, modest withdrawals, and investment income land squarely in that 0% zone, especially after the standard deduction ($16,550 for individuals 65+, roughly $32,300 for couples in 2026) is applied.

Here’s the key insight: taxable income of $0 is not the goal — taxable income just under the threshold is the goal. You can strategically harvest gains every year up to that line, essentially resetting your cost basis (the original price you paid for an investment) at a higher level. When you eventually sell those same shares in a higher-income year, you’ll owe far less.

How do I figure out how much I can sell?

Start with your estimated taxable income for the year — Social Security benefits (up to 85% may be taxable, explained below), pension income, IRA withdrawals, interest, and dividends. Subtract your standard or itemized deduction. The gap between that number and the 0% threshold is your “harvesting room.”

For example: a married couple with $55,000 in combined gross income and a $32,300 standard deduction has $22,700 in taxable income. The 0% bracket ceiling is $94,050. That means they have roughly $71,350 of room to realize capital gains at zero federal tax. They could sell appreciated investments worth $71,350 in profit and owe nothing federally.

State taxes are a separate matter — some states tax capital gains, others don’t. Check your state rules or ask a tax professional before pulling the trigger on large sales.

Does selling gains affect my Social Security taxes?

Yes, and this is where careful planning pays off. Up to 85% of your Social Security benefit can be subject to federal income tax, depending on your “combined income” (adjusted gross income + nontaxable interest + half your Social Security). Realizing capital gains increases your AGI, which can push more of your Social Security into the taxable column.

The thresholds are $34,000 for single filers and $44,000 for couples — above those levels, 85% of benefits are taxable. This doesn’t mean you shouldn’t harvest gains; it means you should model the full picture before deciding how much to sell in a given year. A simple spreadsheet or a one-hour session with a fee-only financial planner can prevent a surprise tax bill.

What about Required Minimum Distributions in 2026?

Required Minimum Distributions — or RMDs — are the annual withdrawals the IRS forces you to take from traditional IRAs and 401(k)s once you reach age 73. These withdrawals count as ordinary income and can eat into your 0% capital gains room quickly.

For 2026, the RMD rules remain the same as 2025: the starting age is 73, and the calculation uses the IRS Uniform Lifetime Table based on your account balance on December 31 of the prior year. If you’re already taking RMDs, plan your gain-harvesting after you know your RMD amount for the year, so you don’t accidentally cross into the 15% bracket.

One smart move: if your RMDs are pushing you into a higher bracket anyway, consider a Roth conversion in lower-income years before RMDs kick in. Converting traditional IRA money to a Roth account pays tax now at a lower rate and eliminates future RMDs on that money entirely.

Could selling investments trigger higher Medicare premiums?

Possibly — and this catches a lot of retirees off guard. Medicare Part B premiums in 2025 are $185 per month at the standard rate, but higher earners pay more through a surcharge called IRMAA (Income-Related Monthly Adjustment Amount). IRMAA is based on your income from two years prior, so income you realize in 2026 affects your 2028 Medicare premiums.

For 2025, IRMAA surcharges begin when individual income exceeds $106,000 (or $212,000 for couples). A single large gain-harvesting event could push you over that line and add hundreds of dollars per month to your Medicare costs for a full year. Spreading large sales across two calendar years — for example, half in December and half in January — can help you stay under the threshold.

When is the best time of year to do this?

The fourth quarter is ideal. By October or November, you have a clear picture of your year-to-date income, your RMD amounts, any unexpected income events, and how much room remains in your 0% bracket. You can also use this time to offset gains by tax-loss harvesting — selling investments that are down to cancel out gains from winners, further reducing your taxable income.

If you find you have more room than you expected, you can also make a Roth conversion to fill the bracket, moving traditional IRA money into a tax-free Roth account at a 0% or low rate — a powerful one-two punch.

The bottom line

The 0% capital gains bracket is one of the most underused tax breaks available to retirees. It rewards people who plan ahead, know their numbers, and act before December 31. Selling your winners isn’t just about locking in profits — when done right, it’s a way to restructure your portfolio, reduce future taxes, and keep more of what you’ve built over a lifetime.

The moves that matter most in retirement aren’t dramatic. They’re deliberate, quiet, and compounding — just like the investments that got you here.

Frequently Asked Questions

When should I claim Social Security to maximise my benefit?

You can claim Social Security as early as age 62, but your benefit grows roughly 8% for every year you delay past full retirement age (66–67 for most people today), up to age 70. If you’re in good health and don’t need the income immediately, waiting until 70 can permanently increase your monthly check by 24–32% compared to claiming at full retirement age. Run the break-even analysis — most people who live past 80 come out ahead by waiting.

How much of my Social Security benefit is taxable?

Up to 85% of your Social Security benefit can be subject to federal income tax, depending on your “combined income” (AGI plus nontaxable interest plus half your Social Security). If that combined figure exceeds $34,000 for single filers or $44,000 for couples, 85% of your benefit is taxable. Below $25,000 (single) or $32,000 (couple), none of it is taxable. Thirteen states also tax Social Security to varying degrees.

What are the RMD rules for 2025 and 2026?

Under current law, Required Minimum Distributions from traditional IRAs and 401(k)s begin at age 73. The amount you must withdraw each year is calculated by dividing your December 31 account balance by a life-expectancy factor from the IRS Uniform Lifetime Table. Missing an RMD triggers a 25% penalty on the amount not withdrawn (reduced to 10% if corrected quickly). Roth IRAs are not subject to RMDs during the original owner’s lifetime.

How do I avoid Medicare IRMAA surcharges?

IRMAA (Income-Related Monthly Adjustment Amount) surcharges are triggered when your income two years prior exceeds $106,000 for individuals or $212,000 for couples (2025 thresholds). You can avoid surcharges by managing the timing of Roth conversions, capital gain harvesting, and large IRA withdrawals to stay under those thresholds. If your income dropped significantly due to a life event like retirement or divorce, you can appeal your IRMAA determination using IRS Form SSA-44.

What is the Medicare Part B premium for 2025?

The standard Medicare Part B premium for 2025 is $185.00 per month, up from $174.70 in 2024. Higher-income beneficiaries pay more through IRMAA surcharges, with premiums ranging up to $628.90 per month at the highest income tier. Part B covers outpatient care, doctor visits, and preventive services, and the premium is typically deducted directly from your Social Security benefit.