Ponnati Kluisson | Moments | Getty Images
After a sale, “you can refresh the page and immediately repurchase the same security,” says Cody Garrett, a certified financial planner and founder of Measure Twice Planners in Houston.
According to the IRS, the wash sale rule prevents tax deductions for harvested losses if a “substantially identical” property is purchased within 30 days before or after the sale.
But this rule doesn’t apply to buying and selling profitable assets, said Garrett, who is also co-author of the new book “Tax Planning for Early Retirement.”
Still, he said, harvesting profits can be difficult because more income can have different consequences.
Here’s what investors need to know.
How the 0% capital gains bracket works
For assets held for more than one year, gains are generally subject to long-term capital gains, which are taxed at 0%, 15%, or 20%, depending on your taxable income. Some high earners pay a net investment income tax of 3.8%.
The taxable income limit for the 0% bracket in 2025 is $48,350 for single filers and $96,700 for married couples filing jointly. Calculate your taxable income by subtracting the greater of your standard deduction or itemized deductions from your adjusted gross income.
Note that the standard deduction for 2025 is $15,750 for single filers and $31,500 for married couples filing jointly. For example, if a couple earns $120,000 a year, their taxable income could easily be less than $96,700 after subtracting the $31,500 standard deduction.
There are additional standard deductions for older Americans, including a new $6,000 “senior bonus” enacted by President Donald Trump’s “Big and Beautiful Bill.”
However, after you sell your investment, your taxable income may exceed the 0% capital gains threshold.
Additionally, year-end mutual fund payments and dividends from exchange-traded funds can increase your total taxable income.
“A lot of people reinvest dividends from ETFs and mutual funds,” said CFP Michael DeMassa, founder of Forza Wealth Management in Sarasota, Florida. “They never received it, but it’s on their tax return.”
What you need to know before profiting
If your taxable income is within the 0% capital gains range, you may be able to sell the asset without triggering a claim.
But according to Garrett of Measure Twice Planners, increasing your income can have other surprising results.
For example, older Americans may unknowingly cause increased taxes on their Social Security benefits. Or, your family’s college financial aid may be affected when you submit the Free Application for Federal Student Aid.
Another possible issue could be eligibility for health insurance subsidies in the Affordable Care Act Marketplace, which make monthly premiums more affordable. According to the medical policy group KFF, more than 22 million people, or about 92% of enrollees, will receive subsidies by 2025.
Forza Wealth Management’s DeMassa said “there are a lot of moving parts” and “you need to know the tax implications” before selling an asset.
