What you can actually do about capital gains tax after 65

Turning 65 does not trigger any special exemption from capital gains tax, and the IRS does not have an age-based discount on what you owe. However, several strategies exist that work specifically well for people in retirement: selling assets in years when your overall income is lower, using losses to offset gains, gifting appreciated property to family members, and donating appreciated securities to charity. The key is that your tax bracket and total income for the year determine your capital gains rate, not your age.

If you are retired and living on a fixed income, you may actually be in a lower tax bracket than you were while working. That creates a real opportunity: you can time asset sales to years when your income is lowest, which directly lowers the tax you owe on those gains. This is not a loophole — it is how the tax code works — but it requires planning before you sell.

Key Takeaways

  • Your capital gains tax rate depends on your total income for the year, not your age, so retiring can move you into a lower bracket where long-term gains are taxed at 0%, 15%, or 20%.
  • Selling appreciated assets in years when you have little other income — such as the year you retire or a year with no pension payment — can reduce or eliminate the tax on those gains.
  • Capital losses from any source (stocks, real estate, mutual funds) can offset capital gains dollar-for-dollar, and unused losses carry forward to future years.
  • Donating appreciated securities directly to a charity lets you avoid the capital gains tax entirely while taking a charitable deduction for the full current value.
  • Gifting appreciated property to family members during your lifetime does not trigger capital gains tax for you, though the recipient inherits your cost basis and may owe tax when they sell.

How your tax bracket changes in retirement

Capital gains tax rates are 0%, 15%, or 20% for long-term gains (assets held over one year), depending on your total taxable income. The brackets shift every year, but the structure stays the same: if your income is low enough, you pay nothing on long-term gains. For 2024, a single filer pays 0% on long-term gains if their total income is under roughly $47,000; married filing jointly under roughly $94,000. Once you retire, you may drop into that 0% bracket.

The IRS counts all your income together: Social Security, pensions, interest, dividends, and capital gains. If you have a pension and Social Security but no wages, your total income is often much lower than it was while working. That lower total income is what determines your capital gains rate. If you can keep your total income below the 15% threshold, your long-term gains are taxed at 15% instead of 20%, or even 0% if you stay in the lowest bracket.

This is why timing matters. If you sell a $100,000 appreciated asset in a year when you have $30,000 in other income, you may pay tax at a lower rate than if you sold it in a year when you had $80,000 in other income. The year you retire, or a year when a pension payment is delayed, or a year when you take a smaller withdrawal from savings, can be the right time to harvest gains.

Using capital losses to offset gains

If you own stocks, mutual funds, or real estate that has lost value, you can sell those assets at a loss and use that loss to cancel out capital gains from other sales in the same year. This is called tax-loss harvesting, and it works dollar-for-dollar: a $10,000 loss erases a $10,000 gain. You owe no tax on the gain.

If your losses exceed your gains in a year, you can deduct up to $3,000 of the excess loss against your ordinary income (wages, pensions, interest). Any loss beyond that $3,000 carries forward to the next year, and the year after that, for as long as you live. Many people over 65 have held investments for decades and have losses they have never used. Reviewing your portfolio for underwater positions is often the fastest way to reduce a capital gains bill.

The one rule: you cannot buy back the same security within 30 days before or after the sale, or the IRS will disallow the loss. This is the wash-sale rule. If you sell a stock at a loss on December 15, you cannot buy it again until January 15. You can buy a similar stock in the same sector when ready, which keeps your portfolio positioned the way you want while preserving the loss.

Donating appreciated securities directly to charity

If you own stocks, mutual funds, or bonds that have gained value and you want to give money to charity, donating the security itself — not the cash from selling it — saves you the capital gains tax entirely. You get a charitable deduction for the full current market value, and the charity receives the asset tax-free.

Example: You bought 100 shares of a stock for $5,000 twenty years ago. It is now worth $25,000. If you sell it, you owe capital gains tax on the $20,000 gain. If you donate those 100 shares directly to a may have access to charity, you deduct $25,000 as a charitable contribution and owe zero capital gains tax. The charity sells the shares and keeps the full $25,000.

This works with mutual funds and bonds too. You transfer the securities directly to the charity's brokerage account; you do not sell them first. The charity must be a may have access to organization (most nonprofits, religious institutions, and educational organizations may have access to; donor-advised funds also work). You will need a written appraisal for securities worth over $5,000, and you must itemize deductions on your tax return to claim the charitable deduction.

Gifting appreciated property to family members

You can give appreciated property — real estate, stocks, art, a business interest — to a family member during your lifetime without triggering capital gains tax for yourself. The gift is not taxable income to the recipient either. However, the recipient inherits your original cost basis, meaning if they sell the asset later, they owe capital gains tax on the entire gain from your purchase price to their sale price.

This strategy makes sense when you want to transfer wealth to someone in a lower tax bracket who will hold the asset long-term, or who may never sell it. It does not save tax overall — it just defers it — but it can reduce the total tax paid if the recipient is in a lower bracket when they eventually sell, or if they hold it until death (at which point their heirs get a stepped-up basis and owe no tax on gains that occurred during the original owner's lifetime).

Gifts are not subject to income tax, but they may be subject to gift tax if they exceed $18,000 per recipient per year (2024 limit; this changes annually). You do not owe gift tax unless you exceed your lifetime exemption of roughly $13.61 million (2024), but you must file a gift tax return to report large gifts. Consult a tax professional before gifting property worth more than $20,000.

Timing withdrawals from retirement accounts

If you have a traditional IRA, 401(k), or similar account, withdrawals count as ordinary income and increase your total income for the year. That higher income can push you into a higher capital gains bracket. If you have a choice about when to take withdrawals, taking smaller amounts in years when you plan to sell appreciated assets keeps your total income — and your capital gains rate — lower.

Conversely, if you have a Roth IRA, Roth 401(k), or taxable brokerage account, withdrawals from those accounts do not increase your income. Taking money from a Roth or brokerage account in a year when you are selling appreciated assets does not raise your capital gains rate. This is another reason to track which accounts hold which assets.

At age 73, you must take required minimum distributions (RMDs) from traditional IRAs and 401(k)s, which you cannot avoid. But before that age, you have control over the timing and amount of withdrawals. Using that control to manage your total income in years when you sell appreciated assets is a legitimate tax-planning move.

The stepped-up basis at death

This is not something you can use yourself, but it affects your decision to sell or hold appreciated assets. When you die, your heirs inherit appreciated property at its market value on the date of your death, not at your original purchase price. This is called a stepped-up basis. If you bought a house for $100,000 and it is worth $400,000 when you die, your heirs inherit it at $400,000 and owe no capital gains tax if they sell it when ready.

This means holding appreciated assets until death can eliminate capital gains tax entirely — but only if you do not need the money during retirement. If you do need to sell assets to live on, the stepped-up basis does not help you. The decision to sell now or hold for the step-up depends on your personal situation: how much you need the money, how long you expect to live, and whether you want to leave the asset to heirs or use it yourself.

Frequently Asked Questions

Do I have to pay capital gains tax if I am over 65?

Yes, age alone does not exempt you from capital gains tax. However, if you are retired and have lower total income than you did while working, you may be in a lower tax bracket, which reduces the rate you pay on long-term gains. The tax depends on your income for the year, not your age.

Can I avoid capital gains tax by holding an asset forever?

You avoid capital gains tax on an asset you never sell. However, if you need the money during retirement, you will have to sell eventually and pay tax then. The stepped-up basis at death can eliminate the tax for your heirs, but that does not help you if you need the asset's value while you are alive.

What if I have more capital losses than gains?

You can deduct up to $3,000 of excess losses against your ordinary income in one year. Any loss beyond that carries forward to future years, where you can use it to offset future gains or deduct another $3,000 against ordinary income. You can carry forward losses indefinitely.

Does Social Security count as income for capital gains tax purposes?

Only a portion of Social Security counts toward your income for tax purposes, and the calculation is complex. However, yes, Social Security does increase your total income, which can push you into a higher capital gains bracket. This is one reason to consider the timing of asset sales relative to when you claim Social Security.

Can I give appreciated property to my children to avoid capital gains tax?

You can give appreciated property without owing capital gains tax yourself, but your children inherit your cost basis. When they sell, they owe capital gains tax on the entire gain from your original purchase price. This defers tax but does not eliminate it unless they hold the asset until death.