While the percentages are low, when you consider dollar terms, the amounts look a bit more feasible. The 15 percent bracket for tax year 2014 is a maximum $36,900 for a single filer; $49,400 for a head of household taxpayer; and $73,800 for a married couple filing a joint return. For the 2015 tax year, the 15 percent tax bracket tops out at $37,450 for a single filer; $50,200 for a head of household taxpayer; and $74,900 for a married couple filing a joint return.
Even if you make more than the maximum for your filing status, you still might be able to take advantage of the zero percent rate. The reason: The cutoff amounts are taxable income, not the larger adjusted gross income amount.
"People are used to having deduction phaseouts tied to adjusted gross income," says Scharin. "This one is geared to taxable income."
Taxable, not gross, income
Taxable income, that amount on which you figure how much you owe Uncle Sam, is reached by starting with your gross, or total, income and subtracting any adjustments (also known as above-the-line deductions), your deductions (either standard or itemized) and your personal exemptions.
Depending upon your deductions, your gross income could be substantially more than the income threshold, but you'd still be eligible for the zero tax rate.
For instance, for the 2014 tax year, taxable income of $73,800 for a married couple, which is the top of the joint filers' 15 percent bracket, with two children and who use the standard deduction, translates to an adjusted gross income of $102,000.
Figuring adjusted gross income
|Zero percent taxable capital gains income threshold||$73,800|
|Standard married filing jointly deduction and||$12,400|
|Personal exemptions (4 x $3,950)||+ $15,800|
|Adjusted gross income||$102,000|
And even if your total taxable income is more than the threshold amounts, you might qualify for some tax-free capital gains. "The zero percent rate does not phase out in the same way deduction phaseouts work," says Scharin. "You're looking at other income as well, and you get the zero percent capital gains rate to the extent that your other taxable income is below that threshold."