Is Your 0% Tax Bracket Sitting Empty? Year-End Capital Gains Questions for 2026

When you hear "year-end tax planning," you may think about selling losers. In some low-income years, a retiree may be able to realize long-term gains at a 0% federal tax rate. It is worth asking whether that applies to you.

It sounds backward. It is in the tax code.

Long-term capital gains (on investments held more than one year in a taxable account) and qualified dividends have their own federal tax rates: 0%, 15%, and 20%. For tax year 2026, the 0% rate applies while your taxable income stays at or below:

• $98,900 for married couples filing jointly (and surviving spouses)
• $49,450 for single filers
• $66,200 for heads of household

(Source: IRS Revenue Procedure 2025-32, Sec. 4.03)

Note the word "taxable." That is income after deductions. For 2026, the standard deduction is $32,200 for married couples filing jointly and $16,100 for single filers, before any additional age-65 amounts. (Source: IRS)

Some retirees have a window after the paycheck stops but before Social Security and required minimum distributions fill up their tax return. In those years, taxable income can be unusually low. That is exactly when the 0% bracket can have room in it.

Proverbs 6:6-8 (KJV) points us to the ant, which "provideth her meat in the summer, and gathereth her food in the harvest." There are seasons for gathering. A low-income year can be one of them.

Tax-gain harvesting means selling an appreciated investment in a year when the gain falls in the 0% bracket, then, if it still fits your plan, buying it (or something similar) back. The goal is to reset your cost basis higher so a future sale may produce a smaller taxable gain. Unlike losses, there is no wash-sale rule for gains.

A hypothetical illustration: a married couple, both over 65, expects 2026 taxable income of $70,000 before any investment sales. In that case, roughly $28,900 of long-term gains might fit under the $98,900 line. This example is for illustration only and does not represent any actual client.

The more familiar move is selling an investment at a loss to offset gains. If losses exceed gains, up to $3,000 per year ($1,500 if married filing separately) can offset ordinary income, and the rest carries forward. If you buy a substantially identical security within 30 days before or after the sale, the wash-sale rule disallows the loss. (Sources: IRS Topic No. 409; IRS Publication 550)

• A "0% gain" still raises your income. Capital gains count in your adjusted gross income, which can make more of your Social Security taxable and can affect Medicare IRMAA surcharges two years later.
• It can affect other deductions and credits that phase out with income.
• Run the numbers before December 31, not in April. Trades generally need to be executed by December 31; confirm timing with your custodian.
• This applies to taxable brokerage accounts. Gains inside IRAs and 401(k)s are taxed differently.
• Texas has no state income tax, but if you split time in another state, check its rules.

Some would call this a loophole. It is not. Congress wrote this rate into the law, and using the law as written is not greed. Jesus said, "Render therefore unto Caesar the things which are Caesar's" (Matthew 22:21, KJV). Pay what you owe, gladly and honestly. You are not required to pay what you do not owe. What you keep can be saved, spent wisely, or given.

If you would like help seeing whether your 2026 return has room in the 0% bracket, start with the free Retirement Paycheck Readiness Scorecard at scorecard.matt25capital.com, or call our office at 620-670-9455. Please also coordinate with your tax professional.

• RMD rules for Christian retirees
• End-of-year financial planning for Christians

I'm Will Snodgrass, CFP®, with Matt25 Capital, serving Christian pre-retirees and retirees in The Woodlands, Houston, and across Texas.

• IRS Rev. Proc. 2025-32 Sec. 4.03
• IRS IR-2025-103 (2026 standard deduction)
• IRS Topic 409
• Proverbs 6:6-8, Matthew 22:21 (KJV)