Make Sure to Take Advantage of the Zero Percent Capital Gains Tax Bracket

Many farmers fail to realize capital gains that will be taxed at zero for federal income tax purposes.

There are many situations where farmers can sell assets that they have held for more than a year and owe no federal income taxes on the gain.

Capital gains that are taxed in the old 15% tax bracket are actually taxed at a zero rate. For 2025, single taxpayers hit the top of this tax bracket at $48,350 of taxable income. Married couples are at twice that amount or $96,700.

And remember that these taxable income numbers are after itemized deductions or your standard deduction. The standard deduction for 2025 increases to $30,000 for a married couple which means that a farm couple could have long-term capital gains of $126,700 and owe no federal income tax (assuming they have no other income).

This can lead to some great planning opportunities.