What is the capital gains tax rate for 2025?

Long-term capital gains (assets held over one year) are taxed at 0%, 15%, or 20% depending on your taxable income. Short-term gains are taxed at ordinary income rates up to 37%.

How can I reduce capital gains taxes?

Key strategies include holding investments for over a year to qualify for long-term rates, tax-loss harvesting to offset gains, donating appreciated assets, and timing sales to lower-income years.

Can capital losses offset ordinary income?

Yes. After offsetting capital gains, you can deduct up to $3,000 of net capital losses against ordinary income per year. Unused losses carry forward indefinitely.

investing Audience: general 3 min read

Capital Gains Tax Strategies

Reduce or defer capital gains taxes with smart timing and asset placement.

Last updated on February 20, 2026

Capital gains taxes can be managed through timing, account selection, and loss offsets. If you need a refresher on how gains are taxed, start with capital gains vs ordinary income.

Key Takeaways

Hold investments longer than a year to qualify for long-term rates.
Use tax-loss harvesting to offset gains.
Locate tax-inefficient assets in tax-advantaged accounts.

Strategy 1: Manage Timing

Selling in a year with lower income can reduce the rate applied to gains. If your income swings, pair this with tax bracket planning to see where the 0% and 15% thresholds land.

Short-Term vs Long-Term

Short-term gains (held one year or less) are taxed at ordinary income rates.
Long-term gains (held more than one year) generally receive lower rates.

Strategy 2: Use Losses

Tax-loss harvesting can offset gains and up to $3,000 of ordinary income. See our tax-loss harvesting guide and the tax loss harvesting glossary entry for the mechanics.

Strategy 3: Asset Location

Put high-turnover or interest-heavy assets into tax-advantaged accounts. The asset location guide and taxable vs tax-advantaged account glossary explain how to decide which account gets which asset.

Strategy 4: Donate Appreciated Assets

Instead of selling appreciated stock and donating cash, donate the stock directly to a charity. You avoid capital gains entirely and still get the charitable deduction for the full fair market value (if held over one year).

Strategy 5: Use the 0% Capital Gains Bracket

In 2025, single filers with taxable income up to ~$48,350 (or ~$96,700 for married filing jointly) pay 0% on long-term capital gains. Retirees and those with gap years can strategically realize gains in these low-income periods.

Capital Gains Rate Brackets (2025)

Rate	Single Taxable Income	MFJ Taxable Income
0%	Up to $48,350	Up to $96,700
15%	$48,351 - $533,400	$96,701 - $600,050
20%	Over $533,400	Over $600,050

High earners may also owe the 3.8% Net Investment Income Tax (NIIT) on top of these rates. See the NIIT guide for thresholds and examples.

Tax Loss Harvesting --- using losses to offset capital gains
Asset Location Guide --- placing investments in the right account type
Wash Sale Rule Explained --- avoiding disallowed losses

How sharper.tax Helps

When you upload your tax return to sharper.tax, we analyze your capital gains, losses, and income to identify the most effective strategies for reducing your tax bill. We detect harvesting opportunities, evaluate your bracket headroom, and model the impact of timing your sales differently. Sophisticated tax planning used to require a high-end CPA---we make it available for free.

Sources

The information above is educational and not tax advice.