Capital Gains Harvest
Calculator 2026

Capital gains harvesting (or 'gain harvesting') is a tax strategy where investors deliberately realize long-term capital gains in years their taxable income falls within the 0% LTCG bracket — typically FIRE retirees with no W-2 income, sabbatical years, or years between jobs. Selling appreciated holdings and immediately repurchasing them at the same price 'steps up' the cost basis at zero federal capital gains tax, locking in future tax-free recovery if the asset is held to a higher basis.

Unlike loss harvesting (subject to the §1091 wash sale rule), the wash sale rule does NOT apply to gains — you can sell and immediately rebuy the same security without restriction.

2026 IRS Long-Term Capital Gains brackets (Rev. Proc. 2025-32, applied to taxable income — not gross): Single: 0% on taxable income to $49,450, 15% on $49,451-$545,500, 20% above $545,500.

Married Filing Separately shares the $49,450 zero-rate ceiling but its 15% band ends far earlier, at $306,850. Head of Household: 0% to $66,200, 15% on $66,201-$579,600, 20% above.

Married Filing Jointly: 0% to $98,900, 15% on $98,901-$613,700, 20% above. The 0% bracket effectively extends by the standard deduction (which subtracts from gross to get to taxable income): $16,100 single, $32,200 MFJ, $24,150 HoH.

So the gross-income 0% LTCG ceiling is approximately $65,550 single / $131,100 MFJ for a household with no other income except qualified dividends and LTCG.

Depends on your other ordinary income for the year. The 0% LTCG bracket is FILLED FIRST by ordinary income, then by LTCG/qualified dividends.

Example: married couple with $40,000 ordinary income (after $32,200 standard deduction = $7,800 taxable ordinary) can harvest up to $91,100 of LTCG tax-free ($98,900 0% bracket cap − $7,800 already used by ordinary income). Same couple with $0 ordinary income can harvest the full $131,100 (the 0% bracket cap + standard deduction).

State income tax may still apply. States with no broad personal income tax (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Wyoming) don't tax LTCG.

Washington is the exception among no-income-tax states: it taxes long-term gains above its standard deduction ($278,000 for 2025, indexed) at 7%, plus 2.9% on gains over $1 million. Pennsylvania taxes gains at its flat 3.07% rate, and states such as California, New York and Hawaii tax them as ordinary income at state rates.

No. The wash sale rule (§1091) prohibits claiming a LOSS if you buy a 'substantially identical' security within 30 days before or after the loss sale. The rule explicitly does NOT apply to gains — you can sell appreciated holdings and immediately repurchase the same security with no restriction, locking in the higher cost basis.

This is what makes gain harvesting practical: sell SPY at $400, immediately buy SPY at $400 (same day, same broker), your cost basis updates from (e.g.) $300 to $400 with $100/share gain realized at 0% federal — but you still hold SPY at the new $400 basis. Future sale at higher prices is taxed only on the appreciation above $400.

NIIT (Net Investment Income Tax, IRC §1411) is a 3.8% federal surtax on the lesser of net investment income or excess MAGI over $200,000 single / $250,000 MFJ (thresholds unchanged since 2013 enactment). It applies to LTCG including harvested gains — but ONLY if your MAGI for the year exceeds the threshold.

For most FIRE retirees harvesting in 0% bracket years, MAGI stays well below $200k/$250k, so NIIT doesn't apply. Edge case: a household with $250k+ MAGI (due to e.g. one-off Roth conversion, large rental income, business sale) cannot use the 0% LTCG bracket anyway and faces 15% LTCG + 3.8% NIIT on harvested gains — defeating the strategy.

NIIT planning: keep MAGI below threshold via retirement contributions, muni bonds, or timing income across years.

No. Gain harvesting is a TAXABLE-ACCOUNT strategy. Inside a Traditional or Roth IRA, 401(k), or other tax-advantaged retirement account, capital gains are not currently taxed — withdrawals are taxed at ordinary income rates (Traditional) or tax-free (Roth).

No basis step-up occurs because no tax event happens. The strategy applies only to: (a) taxable brokerage accounts, (b) UTMA/UGMA accounts, (c) ESPP shares held >1 year and >2 years from grant in qualified status.

Tax-loss harvesting is similarly limited to taxable accounts. Inside retirement accounts, the equivalent strategy is Roth conversion (paying tax on conversion at low brackets), not gain harvesting.

Inherited assets receive a 'step-up in basis' to fair market value at the decedent's date of death (IRC §1014). Beneficiaries can sell immediately with $0 capital gain.

This is sometimes called the 'free step-up' — appreciation accumulated during the decedent's life escapes capital gains tax entirely. Implication: if you're elderly and plan to leave assets to heirs, harvesting gains during your lifetime may be UNNECESSARY (the step-up at death achieves the same outcome).

However, harvesting still has value: (a) if you'll spend the money before death, (b) if you want to relocate assets to a different state, (c) if you anticipate the step-up being repealed (proposed multiple times in recent legislation). The Inflation Reduction Act 2022 and Build Back Better Act 2021 both proposed limiting or eliminating step-up — neither passed.

Different goals, both valuable. Gain harvesting LOCKS IN basis at the current price in a 0% bracket year — useful when you have unrealized gains and a low-income year.

Loss harvesting REALIZES LOSSES to offset other gains or up to $3,000 of ordinary income annually (§1211) — useful when you have unrealized losses and a high-income year. Many FIRE practitioners do both: harvest losses in working years (high income, 15-20% LTCG bracket avoided) and harvest gains in retirement years (low income, 0% LTCG bracket).

The wash sale rule applies to losses (30-day repurchase prohibition) but NOT to gains — so the operational complexity differs significantly. Both strategies are administrative — neither generates new wealth, only timing optimization.

December — for two reasons: (1) Income visibility — by mid-December you have a clear picture of your year's other income (W-2, business, rental, etc.), so you can calculate exactly how much LTCG fits in your 0% bracket without spilling into 15%. (2) Mutual fund distribution timing — funds typically distribute capital gains in late December; harvesting before these distributions avoids stacking your harvested gain on top of the distribution. Plan calculation: by November, project your full-year taxable income, then in December execute the harvest order.

Watch for ESPP/RSU vesting events that add to ordinary income. Avoid: harvesting in January based on prior year's income (too speculative for the new year), or harvesting in market dips (the lower price means less gain — but also less basis step-up).

Maintain for 6+ years (covering IRS scrutiny window): (1) Brokerage statements showing the sale date, sale price, and shares of each lot sold — must specify HIGH-COST tax lot if available (use specific identification under §1.1012-1(c) — sell oldest/highest-basis first or specifically identify). (2) Repurchase confirmation showing the rebuy date and price (proves no wash sale concern for any embedded losses in different lots). (3) Form 1099-B from broker (issued in January for prior year) — must reconcile your harvested amounts to broker reporting. (4) Schedule D and Form 8949 attached to Form 1040 — Form 8949 lists each lot, Schedule D summarizes. (5) Updated cost basis records — many brokers reset automatically but verify the new basis is recorded for future sales.