Navigating the Numbers

If you’re planning to sell capital assets (stocks, real estate, or other investments) understanding capital gains rates is key to maximizing your after‑tax returns.

Federal Capital Gains Tax Rates for Tax Year 2025

Long-term capital gains apply to capital assets held more than one year. If you meet this holding requirement you can benefit from preferential federal rates of 0%, 15%, or 20%. The rate you pay is based on your taxable income and filing status. See brackets below.

Short‑term gains apply to capital assets held less than one year and are taxed as ordinary income tax brackets up to 37%.

Minnesota State Tax Treatment

Minnesota does not offer preferential capital gains rates. All net capital gains are added to your ordinary income and taxed up to 9.85%.

Planning Tips & Strategies

1. Try to hold investments for over one year to qualify for the preferential rates.
2. Capital losses can offset capital gains. You can then deduct $3,000 each year of the unused loss annually. Check out this post for more detail.
3. Coordinate sales in years with lower income to potentially fall into the 0% or 15% long‑term brackets.
4. Work with your financial advisor to consider how you should invest high return assets vs assets with more modest returns. Think pretax and post-tax retirement accounts and brokerage accounts.
5. There are exclusions for gains on your personal residences if you meet the requirements.
6. Watch out for Net Investment Income Tax (NIIT). You may owe an additional 3.8% on net investment income (including capital gains) when income exceeds certain thresholds.

Single:

0% Rate – $0 to $48,350

15% Rate – $48,351 to $533,400

20% Rate – $533,401 and up

Married filing jointly:

0% Rate – $0 to $96,700

15% Rate – 96,701 to $600,050

20% Rate – $600,051 and up

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Disclaimer: The tax information provided here is for informational purposes only and should not be construed as or relied upon for tax or legal advice. This information is based on the laws and regulations in effect at the time of issuance, and we do not undertake any obligation to update this information after the date of its release. Please speak with your tax professional or attorney for guidance specific to your circumstances.