Tax-free Capital Gains Are Here
Some taxpayers will pay no capital gains taxes on their 2008 returns.

Talk about the ultimate irony: The long-awaited era of tax-free capital gains has arrived just as the stock market has suffered one of its worst routs since the Great Depression.
Still, some investors -- perhaps those who bought stocks years ago through a discounted employee stock plan -- may still be able to sell their shares at a profit. And if they are in one of the two lowest income-tax brackets, they will pay no taxes on their capital gains if they sell before the end of the year.
The 0% capital-gains rate for those in the 10% and 15% income-tax brackets is scheduled to apply in 2009 and 2010 as well. But some skeptics worry that Congress may rescind the measure in future years as lawmakers search for revenue to offset other tax changes. So if you’re likely to benefit from this strategy -- perhaps if you are self-employed or retired and can control the timing of your income -- grab this tax break before it disappears.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
To qualify for preferential long-term capital-gains treatment, you must hold shares for more than a year before selling. (This applies to assets in taxable accounts, not those in retirement accounts, which are taxed at your ordinary rates upon withdrawal.)
And to take advantage of the 0% capital- gains rate this year, your taxable income can’t exceed $32,550 if you are single, $43,650 if you are a single head of household or $65,100 if you are married filing jointly. Note that this is taxable income. That’s what’s left after you subtract personal exemptions -- worth $3,500 each this year for you, your spouse and your dependents -- and your itemized deductions or standard deduction from your adjusted gross income. Any gains that lift your income above that threshold would be taxed at the maximum 15% capital-gains rate.
One group of taxpayers won’t benefit from the 0% rate -- children affected by the newly expanded "kiddie tax." Starting this year, dependent children under 19 and full-time students under 24 will be affected by the special rule that applies their parents’ higher tax rate to their investment income in excess of $1,800.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

-
Five Smart Moves for Retirement Healthcare: From HSAs to Medigap Policies
Unchecked health care costs in retirement could blow a hole in your savings. Here’s how to avoid that.
-
Capital One Venture X Lounge Access Rules Are Changing – Here’s How to Keep Your Access
Your Capital One Venture X lounge access perks won’t be quite as generous as they used to be. Here’s what’s changing.
-
Five ‘Big Beautiful Bill’ Tax Changes to Watch in the Senate
Tax Policy The House passed its version of Trump’s "One Big, Beautiful Bill." Here’s what to look for as Senate Republicans take up the mega legislation.
-
New GOP Car Loan Tax Deduction: Which Vehicles and Buyers Qualify
Tax Breaks To fulfill Trump's campaign promise, House GOP lawmakers want to offer a tax deduction for car loan interest. How would it work?
-
Big GOP Tax Bill Could Change Your Estate Planning for 2025
Tax Law The GOP might extend and increase the higher estate and gift tax exemption and AMT thresholds. What might this mean for your estate plan?
-
Ten Cheapest Places To Live in New York
Property Tax If you’re planning a move in New York, here are the counties with the lowest property tax bills in the Empire State.
-
‘My Etsy Shop is Dead’: Vendors Cry for Help Amid Trump’s Tariffs
Tariffs Small businesses are struggling to thrive as they absorb the Trump administration’s new wave of tariffs.
-
Three Things Star Wars Fans Taught Me About Tax
Tax Tips May the force be with you and your taxes this Star Wars Day 2025.
-
Retirees: Don’t Miss These Valuable State Tax Breaks in 2025
Retirement Planning Selecting the right state for retirement can significantly impact your financial well-being.
-
10 Cheapest Places To Live in Florida
Property Tax Make your Florida vacation spot a place for daily living — these counties have the lowest property tax bills in the state.