NEWS
When President Trump signed the One Big Beautiful Bill Act on July 4, 2025, investors looked for changes to capital gains tax rates. Instead, the law preserved familiar structures. The capital gains tax system, which affects a wide range of investment income, remains unchanged, and the Opportunity Zone program is now a permanent feature of federal tax law.
The Internal Revenue Service has confirmed that the capital gains tax system will remain unchanged in 2025. Long-term capital gains—profits from the sale of capital assets held longer than one year—are taxed at 0%, 15%, or 20%, depending on the taxpayer’s taxable income and filing status.
For single filers, the 0% rate applies to income up to $48,350. The 15% rate applies to the first $533,400, and any amount above that is taxed at 20%. For married couples filing jointly, the thresholds are $96,700 and $600,050, respectively.
Gains on assets held less than one year are taxed as ordinary income under the short-term capital gains tax rules. These rates can reach up to 37% depending on the taxpayer’s personal income tax bracket.
Additionally, the Net Investment Income Tax remains applicable. This 3.8% surtax applies to individuals with investment income exceeding $200,000 (or $250,000 for married couples filing jointly). It increases the effective federal tax rate for high-income earners with significant investment returns.
The OBBB Act extended the Opportunity Zone program indefinitely. Enacted initially under the 2017 Tax Cuts and Jobs Act, the program was designed to direct investment into economically distressed communities. The extension provides long-term planning certainty for taxpayers who reinvest capital gains into Qualified Opportunity Funds.
Under current rules, taxpayers who invest capital gains into a Qualified Opportunity Fund within 180 days can defer paying taxes on the original gain until December 31, 2026. If the investment is held for at least 10 years, any appreciation within the fund is permanently excluded from capital gains taxes.
Although the five- and seven-year basis step-ups are no longer available for new investments, the 10-year exemption remains in effect. This is particularly relevant for those selling investment property, financial instruments, or real estate.
Starting in 2026, states may revise which areas qualify for Opportunity Zone status. This change enables governors to target investments more effectively in distressed communities. The OBBB Act also removed the contiguous tract exception, which previously allowed higher-income neighborhoods adjacent to low-income zones to qualify for the exemption.
These refinements aim to improve the policy’s economic impact while preserving its tax benefits for compliant investors.
Consider a single taxpayer earning $40,000 who sells a stock held for 13 months. That gain qualifies for the 0% long-term capital gains rate. If sold after only 11 months, the gain would be subject to the short-term capital gains tax, likely 12% or more.
A married couple with $150,000 in taxable income would fall under the 15% long-term capital gains tax rate. On a $50,000 gain, they would owe $7,500—much less than if the same gain were taxed as ordinary income.
A high-income couple earning $650,000 in 2025 would pay the top 20% capital gains tax rate, plus the Net Investment Income Tax on a portion of the gain. If they reinvested that gain into a Qualified Opportunity Fund and held the investment for 10 years, they could defer the tax and ultimately eliminate it on future appreciation.
This strategy can be particularly beneficial following a major liquidity event, such as the sale of a business, primary residence, or installment sale of real estate.
According to recent IRS guidance, capital gains rules and filing requirements remain consistent for 2025. Taxpayers must report gains using Form 8949 and summarize totals on Schedule D of Form 1040. “Long-term capital gains tax provisions remain unchanged for 2025,” the IRS confirmed. “Qualified Opportunity Fund investments continue to follow existing eligibility and reporting procedures.”
The Bipartisan Policy Center also emphasized the value of policy stability. “Keeping the capital gains framework intact gives taxpayers clarity, particularly those managing retirement accounts or wealth transfer strategies,” a policy analyst noted in an August report.
The Tax Foundation reported that capital gains realizations have exceeded $2 trillion in recent years, pointing to strong investor confidence in the current system. The group noted that frequent changes to tax codes can disrupt portfolio decisions and economic growth.
With capital gains rules unchanged, taxpayers should review their portfolios before the end of 2025. Timing remains critical. Selling after the one-year mark converts a short-term taxable gain into a long-term capital gain, which results in a lower federal tax rate.
Tax-loss harvesting remains a valuable tool, allowing taxpayers to offset gains with realized losses. Up to $3,000 in net investment losses can also be deducted from ordinary income annually, with remaining losses carried forward indefinitely.
Those selling a home that qualifies as a primary residence may still benefit from the Section 121 exclusion. This allows up to $250,000 (or $500,000 for married couples) of gain to be excluded from capital gains taxes, provided the ownership and use tests are met. Home improvements and closing costs may affect the final tax calculation and cost basis.
Taxpayers planning large transactions should consult a tax professional or financial advisor to ensure proper documentation, reporting, and strategy alignment. Tools such as IRS Publication 523, Publication 550, and Form 8949 provide meaningful guidance for capital gains reporting and tax-smart planning.
By William Mc Lee, Editor-in-Chief & Tax Expert—Get Tax Relief Now
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