As the year draws to a close, investors are considering their year-end financial planning strategies, including “tax gain harvesting,” which involves selling profitable brokerage account assets during lower income years to take advantage of the 0% capital gains bracket. According to certified financial planner Cody Garrett, founder of Measure Twice Planners in Houston, it’s essential to have precise 2025 tax projections to avoid unexpected costs.

Many investors are sitting on significant portfolio gains, with the S&P 500 up around 16% year-to-date as of mid-day on Dec. 15. Tax gain harvesting offers several benefits, including accessing profits or rebalancing a brokerage account without increasing income, as well as selling and repurchasing assets to “reset the basis” and save on future taxes.

Understanding the 0% Capital Gains Bracket

To qualify for the 0% capital gains bracket, investors must have a taxable income below $48,350 for single filers or $96,700 for married couples filing jointly in 2025. Taxable income is calculated by subtracting the greater of the standard or itemized deductions from adjusted gross income and adding any profitable investments sold. The 0% capital gains bracket applies to long-term capital gains, which are taxed at 0%, 15%, or 20%, with an additional 3.8% net investment income tax for higher earners.

Year-End Income from ETFs and Mutual Funds

Investors should also consider year-end income from ETFs and mutual funds, including qualified dividends, which are typically classified around year-end by custodians like Vanguard, Fidelity, or Schwab. Qualified dividends, paid by domestic and certain foreign corporations after a specific holding period, receive long-term capital gains tax treatment, while nonqualified dividends are subject to regular income tax rates.

Planning for Year-End ETF or Mutual Fund Income

While mutual funds often provide estimates for year-end payouts, the exact amount may not be known until it’s received. Similarly, the classification of dividends as qualified or nonqualified may not be known until year-end. However, investors can review their previous year’s tax return for estimates, according to CFP Michael DeMassa, founder of Forza Wealth Management in Sarasota, Florida.

Smart Tip for Readers

To make the most of tax gain harvesting, review your investment portfolio and tax projections carefully, considering factors like year-end income from ETFs and mutual funds, and consult with a financial advisor if needed. For more information on capital gains brackets, visit Here