The 2025 tax legislation signed into law by President Trump, commonly referred to as the One Big Beautiful Bill Act, largely preserves the existing capital gains tax framework. Long-term capital gains rates remain set at 0%, 15% and 20%, with no changes to the underlying brackets.
No, the core federal long-term capital gains tax rates (0%, 15%, 20%) are not changing in 2025 due to the major tax bill signed in mid-2025, but new deductions and inflation adjustments slightly shift the income thresholds, potentially expanding the 0% bracket for some taxpayers, with Washington State also seeing local changes.
The standard deduction increased for 2025 and 2026, and a new temporary “bonus” deduction for adults 65 and older begins in 2025. The child tax credit increased to $2,200 for the 2025 and 2026 tax years; retirement plan contribution limits for IRAs and 401(k)s also increased for 2026.
Donald Trump has recently proposed eliminating property taxes across the United States, stirring up a major debate on housing and taxes.
You can avoid or minimize capital gains tax by holding assets over a year for lower long-term rates, using tax-advantaged accounts (like Roth IRAs/401(k)s), donating appreciated assets to charity, using tax-loss harvesting to offset gains, or leveraging primary residence exclusions for your home, but completely avoiding tax often involves specific strategies like Qualified Opportunity Zones or 1031 exchanges for real estate.
If the individual tax cuts expire, taxpayers in all income groups would face higher and more complicated taxes. Machinery and equipment expensing is a key provision that, if allowed to expire, would especially harm capital-intensive industries like manufacturing.
2025 Long-Term Capital Gains Tax Rates
Reducing the top long-term capital gains rate to 15%, from the current 20% Indexing capital gains to inflation, allowing investors to adjust cost basis to account for price changes over time.
Some of the major tax changes effective from April 1, 2025, are revised tax slabs, rebate of up to Rs. 60,000, revised ITRU deadlines, calculation of partner's remuneration allowable as a deduction and revised TDS/TCS threshold limits. What is the Rebate available under section 87A?
Individual tax proposals
President Biden's proposal to increase the top individual ordinary income tax rate to 39.6% is projected to raise $245.9 billion over 10 years. The proposal to tax capital gain income for high earners at ordinary rates is projected to raise $288.5 billion over the same period.
Capital Gains Tax (CGT)
The Chancellor raised CGT rates at the last Budget — increasing the lower rate from 10% to 18% and the higher rate from 20% to 24%.
Eric Trump, the son of President Donald Trump, recently teased the idea of a “zero crypto tax policy”. He argued that eliminating taxes on cryptocurrency gains could encourage innovation, attract investment, and position the United States as a global leader in the crypto space.
Seven major tax cuts took effect for 2025 under the OBBBA:
For 2025, long-term capital gains (assets held over a year) are taxed at 0%, 15%, or 20%, depending on your taxable income and filing status, with income thresholds adjusted for inflation, while short-term gains (assets held under a year) are taxed as ordinary income. High-income earners might also pay the 3.8% Net Investment Income Tax (NIIT) on top of the 20% rate, reaching 23.8%, plus any applicable state capital gains taxes.
Overview of the deduction
Effective 2025 through 2028, individuals age 65 and older may claim an additional $6,000 deduction. This is in addition to the standard deduction for seniors available under existing law. Applies per eligible individual (or $12,000 for a married couple if both spouses qualify).
The "6-year rule" for Capital Gains Tax (CGT) in Australia allows you to treat a former main residence as tax-exempt for up to six years after you move out, even if you rent it out, enabling you to avoid CGT on any growth during that period. You qualify by moving out, choosing to treat it as your main home for tax, and can reset the rule by moving back in. If you rent it out for longer than six years, only the portion of the gain after the six-year mark becomes taxable.
The Tax Cuts and Jobs Act reduced tax rates for taxpayers across all income levels, on average. If Congress allows the TCJA to expire as scheduled, most aspects of the individual income tax would undergo substantial changes, resulting in more than 62 percent of tax filers experiencing tax increases in 2026.
To avoid the 22% tax bracket (or any higher bracket), focus on reducing your taxable income through strategies like maxing out 401(k)s and HSAs, deferring bonuses, tax-loss harvesting, smart charitable giving, and strategic asset location, understanding that higher rates only apply to income within that bracket, not your entire income.
The following TCJA provisions are set to expire after 2025. Near doubling of the standard deduction, repeal of personal exemptions, and lower value of several itemized deductions, including those for: State and local taxes (SALT) Mortgage interest.
Long-term capital gains — that is, on assets held for a year or longer — are taxed at a 0%, 15% or 20% rate, depending on your total taxable income for the year. Those rates are in effect for the 2024, 2025 and 2026 tax years.
The 2025 Federal Tax Debate
Much like the 2017 tax law, the new law favors the richest taxpayers. More than 70 percent of the net tax cuts will go to the richest fifth of Americans in 2026, only 10 percent will go to the middle fifth of Americans, and less than 1 percent will go to the poorest fifth.