Military Money Manual has partnered with CardRatings for our coverage of credit card products and may receive a commission from card issuers. This site may earn compensation when a customer clicks on a link, when an application is approved, or when an account is opened. Some or all of the cards that appear on this site are from advertisers and may impact how and where card products appear on the site. This site does not include all card companies or all available card offers. Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer. Welcome offers vary and you may not be eligible for an offer. All information about the American Express® Green Card, Marriott Bonvoy Bold® Credit Card, and the Chase Freedom Flex® Credit Card has been collected independently by Military Money Manual. These cards are no longer available through CardRatings.com. The information related to the Chase Sapphire Preferred® Card, Chase Sapphire Reserve®, United℠ Explorer Card, United Quest℠ Card, United Club℠ Card, Southwest Rapid Rewards® Priority Credit Card, Southwest Rapid Rewards® Premier Credit Card, Southwest Rapid Rewards® Plus Credit Card, The World of Hyatt Credit Card, IHG One Rewards Premier Credit Card, Marriott Bonvoy Boundless® Credit Card, and Aeroplan® World Elite Mastercard® Credit Card was collected by Military Money Manual and has not been reviewed or provided by the issuer of this product/card. These cards are also no longer available through CardRatings.com. Thank you for supporting my independent, veteran owned site.
Tax gain harvesting: how much can you realize at 0%?
Long-term capital gains are taxed at 0% federally while your taxable income stays under a ceiling. Military pay is mostly base pay (BAH and BAS are not taxed), so many servicemembers have room to sell winners, pay nothing, and buy right back at a higher cost basis.
0% gain room by rank
How it works. Long-term gains stack on top of your other taxable income. Whatever sits below the ceiling ($49,450 single, $98,900 married filing jointly, $66,200 head of household for 2026) is taxed at 0%; the rest is taxed at 15%. Realizing a gain and immediately rebuying the same fund is allowed (the wash sale rule only applies to losses) and resets your cost basis, so future gains are smaller.
What this ignores. State income tax (most states tax gains as ordinary income, though many exempt military pay or have no income tax). Special pays and bonuses, which are taxable and shrink your room. Itemized deductions, credits, and income-tested benefits such as the Saver's Credit, ACA subsidies, or FAFSA. Short-term gains (held one year or less), which are taxed as ordinary income. Officer CZTE exclusion is capped at the top enlisted pay rate plus $225 per month.
Education only, not tax advice. Verify against your own return or a tax professional before selling.
Military service members, especially when deployed to a combat zone tax exclusion area, have a unique opportunity to tax-gain harvest.
Tax-gain harvesting means selling assets, such as appreciated stocks, ETFs, or mutual funds in a taxable brokerage account, paying 0% federal income tax on the long-term capital gains, and then reinvesting in the same fund.
There's no wash-sale rule to worry about here, since you are selling at a gain, not a loss.
Long-term capital gains, i.e. assets that you hold for longer than 1 year, stack on top of your ordinary income.
How capital gains stack on top of ordinary income
Your ordinary income (pay, interest, short-term gains) fills the income tax brackets from the bottom. Long-term capital gains and qualified dividends are then stacked on top, and taxed by where they land against a separate set of thresholds. Gains never push your pay into a higher bracket. Your pay does push gains into a higher one.
Tax on this stack
Reading the chart. Blue blocks are ordinary income, shaded darker as the rate rises. The colored blocks on top are your gains: green is taxed at 0%, amber at 15%, red at 20%. The left ruler marks the ordinary bracket lines, the right ruler marks the gains thresholds. They are close but not identical: in 2026 the 12% bracket ends at $50,400 for a single filer, but the 0% gains rate ends at $49,450.
Why it matters for tax gain harvesting. Any gap between the top of your ordinary income and the 0% threshold is free space. Realizing gains up to that line costs nothing federally and resets your cost basis. Realizing beyond it costs 15 cents per dollar, which is still usually better than the 22% or higher you would pay if those dollars were ordinary income.
Federal only; ignores state tax, the 3.8% net investment income tax above $200k/$250k MAGI, and credits. Education, not tax advice.