Capital Gains Tax Strategies 2025: Minimize Investment Taxes

For 2025, long-term capital gains (assets held more than one year) are taxed at 0%, 15%, or 20% depending on your taxable income and filing status. Single filers pay 0% up to $47,025, 15% from $47,026 to $518,900, and 20% above $518,900. Married filing jointly pay 0% up to $94,050, 15% from $94,051 to $583,750, and 20% above $583,750. Head of household pay 0% up to $63,000, 15% from $63,001 to $551,350, and 20% above $551,350. These thresholds are based on taxable income, not just capital gains - so your ordinary income fills up the lower brackets first, and gains stack on top. Use the Capital Gains Calculator to see exactly where your gains fall.

Capital losses first offset capital gains dollar-for-dollar (short-term losses against short-term gains first, then net against each other). If your total losses exceed your total gains, you can deduct up to $3,000 ($1,500 if married filing separately) of the excess against your ordinary income for the year. Any remaining loss carries forward indefinitely to future tax years. For example, if you have $15,000 in losses and $5,000 in gains, you have a $10,000 net loss. You deduct $3,000 against ordinary income this year and carry forward $7,000 to next year. Strategic loss harvesting can build up carryforward losses for future high-gain years.

Yes - qualified dividends are taxed at the same favorable 0%, 15%, or 20% rates as long-term capital gains. To qualify, you must hold the stock for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. Most dividends from U.S. corporations and qualified foreign corporations meet this test if you hold long enough. Non-qualified dividends (like those from REITs, money market funds, or stocks held too briefly) are taxed at ordinary income rates. Check your 1099-DIV to see how much of your dividends were qualified.

As of 2025, the IRS wash-sale rule (Section 1091) technically applies to securities - stocks, bonds, ETFs, mutual funds. Most tax professionals interpret this as meaning crypto is NOT currently covered by wash-sale rules, allowing you to sell at a loss and immediately repurchase the same crypto. However, this is an area of active regulatory discussion, and proposed legislation could change this treatment. Be conservative: keep detailed records, monitor for law changes, and consider consulting a tax professional if you are doing significant crypto loss harvesting. The treatment could change at any time.

Yes - many futures contracts and broad-based index options qualify for Section 1256 treatment, which provides a favorable 60/40 tax split: 60% of gains are taxed as long-term capital gains and 40% as short-term, regardless of how long you held the position. This is beneficial for active traders because even day trades get partial long-term treatment. Section 1256 contracts are also marked-to-market at year-end, meaning you recognize gains and losses on open positions as of December 31. This applies to regulated futures contracts (like CME/CBOT products) and certain index options (like SPX, NDX). Equity options on individual stocks do NOT get 1256 treatment. Consult a tax professional familiar with derivatives taxation.

Most states tax capital gains as ordinary income, which can add 0-13%+ on top of federal rates. A few states (like Florida, Texas, Washington, Nevada) have no state income tax. Some states have preferential rates for long-term gains or exclude certain gains. State treatment can significantly affect your after-tax return and strategy decisions. For example, a California resident in the top bracket faces an additional 13.3% on short-term gains. Consider state taxes when deciding whether to realize gains in a particular year or when planning a move. The Capital Gains Calculator can help model federal impact; for state-specific planning, consult a tax professional in your state.