When you sell an asset for more than you paid for it, you will owe capital gains taxes.
Almost everything you own and use for personal or investment purposes is a capital asset.
The most common examples of capital assets are stocks, indexes, mutual funds, ETFs, real estate, and business ownership.
If these assets are held inside traditional or Roth IRAs or similar tax-advantaged accounts, the buy/sell activity itself doesn’t trigger capital gains tax; taxation happens (or not) when funds are distributed, generally as ordinary income for traditional accounts and typically tax-free for qualified Roth withdrawals.
For your non-retirement accounts, which we typically call your brokerage, your Transfer on Death (TOD), or even a revocable living trust account, capital gains taxes apply.
The duration you hold a capital asset impacts how it is taxed when sold.
If you hold the asset for 1 year or less, you are subject to ordinary income taxes (the same tax rates that apply to your W-2 income and Traditional IRA/401(k) distributions).
If you hold the asset for at least 1 year and 1 day, you are subject to long-term capital gains rates, which are favorable tax rates.
2026 Long-Term Capital Gains Tax Rates
| Long-Term Capital Gains Tax Rate | Single Filers (Taxable Income) | Married Filing Jointly |
|---|---|---|
| 0% | $0 – $49,449 | $0 – $89,900 |
| 15% | $49,450 – $545,499 | $98,901 – $613,700 |
| 20% | $545,500+ | $613,701+ |
At Vocare, we talk to clients quite a bit about the Vocare Tax ValleyTM, which is the period after you retire and have zero W-2 income, and before you turn on your Social Security (and you are sometimes still some ways away from your Required Minimum Distribution age). This is a key period for tax planning.
Why?
- Social Security isn’t adding to your adjusted gross income (AGI), and
- Required Minimum Distributions are not added to your AGI
What that means is that, outside of any taxable interest, dividends, or capital gains your portfolio is generating, you start with a very low adjusted gross income. You might even have zero adjusted gross income.
Here is 1 of the key planning opportunities in the Vocare Tax ValleyTM. If you are filing as an individual and have no other income sources, you can realize $65,500 of long-term capital gains at a 0% tax rate. You get to $65,500 by adding the standard deduction for an individual, $16,100 in 2026, to $49,450, which is in the 0% long-term capital gains bracket for individuals.
If you are married filing jointly, you can realize $131,100 in long-term capital gains at a 0% tax rate. You get there by adding the standard deduction for a married filing jointly (MFJ) couple, $32,200, to $98,900, which is the 0% long-term capital gains bracket for MFJ couples.
Maybe you are sitting on a stock that has appreciated a very large amount, you might decide to delay social security, pension and annuity income so that you can strategically realize some capital gains at 0%, and by doing so, you not only mitigate the tax liability on that investment, you have the proceeds from the sale of the investment to accomplish other goals such as cash flow in retirement (after all, you are retired and don’t have a W-2 anymore, and you haven’t turned on social security) or using a portion of those proceeds to effect Roth conversions at favorable tax rates in future years.
Every year you move through the Vocare Tax ValleyTM without a strategy is a year of tax savings you can’t get back. Once Social Security and Required Minimum Distributions (RMDs) start, the window closes, and those opportunities are gone for good.
If you’re within five years of retirement (or already retired), contact us for a personalized Tax Valley analysis and second opinion on your current plan.
The Vocare Wealth Advisors Team
Any opinions are those of Vocare Wealth Advisors and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Prior to making an investment decision, please consult with your financial advisor about your individual situation.
