Capital Gains Tax in Retirement

Long-term capital gains, from assets held more than one year, are taxed at preferential rates of 0%, 15%, or 20% depending on your taxable income. For 2026, single filers with taxable income up to approximately $48,350 pay 0% on long-term gains, and married filers up to approximately $96,700 also qualify for the 0% rate. This creates a significant planning opportunity for retirees who draw primarily from tax-advantaged accounts: by managing the amount of ordinary income you take each year, you may be able to realize capital gains in taxable accounts at the 0% rate. Additionally, assets held in taxable accounts receive a stepped-up cost basis at death, eliminating embedded gains for heirs. Roth IRA withdrawals do not count toward capital gains income thresholds, making them a powerful tool for staying within the 0% bracket. At Moore Invested, capital gains management is an integrated part of every client’s retirement tax strategy.

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