Most seniors don’t realize there’s a clever financial maneuver that can shrink their tax bill in a big way. In fact, if you’re over a certain age, filing jointly with your partner, and meet the right conditions, you could earn as much as $141,900 tax-free in 2025.
The strategy is called tax gain harvesting, and it could reshape your retirement plan.
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Tax gain harvesting
Much like tax-loss harvesting, tax gain harvesting involves selling your assets strategically to lock in gains at lower tax rates. While selling at a loss cuts your liability, selling at a gain when your income is low or your tax deductions are high can have a similar effect.
The key here is the favorable treatment of long-term capital gains. In 2025, a single filer can qualify for a 0% tax rate on capital gains if their taxable income is below $48,350. For married couples filing jointly, that threshold doubles to $96,700, according to CNBC [1].
If your income is well below that threshold — say $36,700 combined for you and your partner — you could sell assets and lock in up to $60,000 in capital gains without paying taxes. Add in the 2025 standard deduction of $30,000, and you can shelter even more, according to the IRS [2].
Altogether, a couple could walk away with as much as $126,700 tax-free through tax gain harvesting. That’s a six-figure income with no tax liability. And if you’re over 65, you can unlock even more.
Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
Bonus deductions for 65+
Those over 65 have an extra opportunity to maximize this strategy. The Trump administration’s tax bill added a $6,000 bonus deduction per person in this age group, according to the IRS [3]. For couples filing together, that’s $12,000.
The best part? These deductions are in addition to the standard older adults deduction. Single filers over 65 still enjoy a deduction for $2,000, while couples filing jointly can claim $1,600 per spouse, according to the AARP [4].
When you combine the income thresholds for long-term gains with the standard and bonus deductions, a couple could generate as much as $141,900 tax-free in 2025.
Here’s how it works in practice. James and Julia, both 66 and retired, have no income. They don’t claim Social Security or other benefits, but they do have a joint brokerage account worth $283,800 with a cost basis of $141,900.
In 2025, they liquidate the entire brokerage account at its current market value, realizing $141,900 in gains. When they file their taxes together, their gains break down as follows:
- $96,700 in long-term capital gains taxed at 0%.
- $30,000 in standard deductions.
- $12,000 in bonus deductions for older adults.
- $3,200 in existing deductions for older adults.
That means James and Julia walk away with a six-figure income completely tax-free.
Of course, the strategy is complex, and most people would benefit from working with a professional advisor to ensure it’s done right.
Buyer beware
Unlike the near-perfect case study above, your family’s income and tax situation could be much more complicated. For example, if you or your partner relies on Social Security or Medicare, tax gain harvesting could change how your modified adjusted gross income (MAGI) is calculated, which might reduce your benefits.
Trump’s bonus deduction for seniors also has income thresholds — $75,000 for individuals and $150,000 for joint filers — and you’ll need to factor in the 3.8% net investment income surcharge, according to the IRS [5].
And if you earn additional income from a part-time job, freelance business or rental income from properties you own, the tax gain harvesting method becomes even more complicated.
In short, tax gain harvesting can be a powerful tool, but it’s not one to tackle alone. Talk to a financial expert before making any decisions.
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Article sources
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[1]. CNBC. “There’s a ‘golden opportunity’ to pay 0% capital gains under Trump’s ‘big beautiful bill,’ experts say”
[2]. IRS. “IRS releases tax inflation adjustments for tax year 2025”
[3]. IRS. “One, Big, Beautiful Bill Act of 2025 provisions”
[4]. American Association of Retired Persons. “What to Know About the New Tax Deduction for Older Adults”
[5]. IRS. “Find out if net investment income tax applies to you”
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.