TAX PLANNING • RETIREMENT INCOME • INVESTMENT DECISIONS
You’ve spent years building wealth. Which dollars you access—and when—can make a meaningful difference in what you keep.
Some investors postpone selling an appreciated investment because they assume a substantial tax bill will follow. Others take a retirement account withdrawal without considering how it might increase taxes on their investment income.
Both decisions deserve a closer look. Understanding how your income fits together can reveal opportunities and help you avoid unnecessary surprises.
◆ Three rates. One connected income picture.
For married couples filing jointly in 2026, most net long-term capital gains and qualified dividends fall into these federal brackets:
0%
Total taxable income up to $98,900
15%
Total taxable income above $98,900 through $613,700
20%
Total taxable income above $613,700
The key distinction: These thresholds use taxable income after deductions, rather than gross income or adjusted gross income. Certain types of gains have different rules.
↑ Ordinary income fills the bottom. Gains stack on top.
Your ordinary taxable income generally fills the lower portion of the income stack. Net long-term capital gains and qualified dividends sit above it.
Sources of ordinary income generally include:
- Taxable wages, pension income, and Social Security benefits.
- Taxable traditional IRA and 401(k) withdrawals.
- Taxable interest and nonqualified dividends.
- Short-term capital gains.
✓ A SIMPLIFIED EXAMPLE
A married couple has $70,000 in ordinary taxable income after deductions.
$98,900 − $70,000 = $28,900
That leaves $28,900 of potential room for qualifying net long-term capital gains and qualified dividends at the 0% federal rate.
This example assumes no other gains or qualified dividends and no changes to deductions or taxable benefits. Qualified dividends also use the available room.
→ Crossing a bracket does not raise the rate on all your gains.
Only the portion above the threshold moves into the next capital gains bracket.
+ The additional 3.8% connection
The Net Investment Income Tax (NIIT) uses a different measure: modified adjusted gross income, or MAGI. Its thresholds include:
- $250,000 for married couples filing jointly.
- $200,000 for single filers and heads of household.
The 3.8% tax applies to the lesser of net investment income or the amount MAGI exceeds the applicable threshold. Net investment income generally includes taxable interest, dividends, capital gains, and certain rental and passive business income.
ONE WITHDRAWAL CAN AFFECT ANOTHER TAX
Taxable IRA withdrawal
↓ Higher MAGI
↓ Potential 3.8% tax on investment income
The IRA withdrawal itself is not subject to NIIT. But it can increase MAGI enough to expose investment income to the additional tax.
◆ Before you act, connect the decisions.
Before selling an investment, taking an IRA withdrawal, or completing a Roth conversion, consider:
- Your opportunity: Is there room to recognize long-term gains at 0%?
- Your competing choices: Would a withdrawal or Roth conversion use that room?
- Your wider tax picture: Could the decision trigger additional taxes or other income-related effects?
- Your timing: How does acting this year compare with spreading decisions across several years?
A 0% federal capital gains rate does not necessarily mean a transaction has no other consequences. State taxes and other income-based calculations still deserve attention.
At Jackson Wealth Management, we look at your tax picture alongside your investments, retirement income, and goals through our Chart Your Course™ planning process. That coordination helps us evaluate the tradeoffs before you make a consequential decision.
Thoughtful coordination.
More informed decisions.
You don’t need to have all the answers before we talk.
Explore where a more coordinated approach could bring clarity to your next decision.
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Without cost or obligation.
Educational information only; not individualized tax or legal advice. Examples are hypothetical. Tax treatment depends on individual circumstances, and tax laws may change. Figures shown are for tax year 2026. Consult your tax professional about your situation.
Sources:IRS Revenue Procedure 2025-32; IRS Form 1040 Instructions; IRS Topic 559; IRS Publication 590-B.