A Retired Couple on Pension Income Can Realize Stock Gains at 0% Tax Until Age 73, Then RMDs Start Pushing Part of Those Sales Into the 15% Bracket

Quick Read

• A pension-based couple may sell up to $86,400 in appreciated stock with no federal capital gains tax before required minimum distributions begin, after which that room shrinks dollar for dollar.

• When the first RMD of about $30,189 arrives at age 73, part of those gains moves into the 15% bracket, creating roughly $4,528 in additional federal tax.

• Qualified charitable distributions of up to $111,000 per person can satisfy the RMD while keeping taxable income down and preserving the zero-rate opportunity.

A retired couple living on pension income can sell appreciated stock each year and pay no federal tax on the gain. That advantage can continue until one spouse reaches 73, when the first required minimum distribution, or RMD, begins adding ordinary income and starts crowding some of those gains into the 15% bracket. We previously examined how a Roth conversion fits within the zero-rate window in a single year. Here, the issue is timing across multiple years, with a birthday acting as the trigger.

How Capital Gains Stack on Top of Pension Income

For joint filers, long-term capital gains are taxed at 0% as long as taxable income remains at or below $98,900. The rule works by stacking income: ordinary income such as pensions and IRA withdrawals fills the lower brackets first, and capital gains are layered on top. Only the portion of gains that fits below that threshold after ordinary income is counted receives the zero rate.

Deductions increase that available space. In 2026, the standard deduction for married couples filing jointly is $32,200, with an additional $1,650 for each spouse age 65 or older. There is also a senior deduction of $6,000 per person available from 2025 through 2028, although it begins phasing out for joint filers once modified adjusted gross income, or MAGI, exceeds $150,000.

Modeling the Window Before and After the First RMD

To illustrate the effect, assume both spouses are 72 in 2026, receive $60,000 in combined pension income, collect no Social Security, and hold $800,000 in a traditional IRA at the end of the prior year. Their taxable brokerage account also contains significant long-term gains. The 2026 rules are applied in both years so the comparison stays clean.

Before RMDs begin, their deductions total $47,500. That leaves room to realize $86,400 of gains at a 0% federal rate, while MAGI lands at $146,400, just below the senior deduction phase-out. For anyone who turned 72 after December 31, 2022, RMDs start at age 73. Using the IRS divisor of 26.5 at that age, the first required withdrawal comes to about $30,189. That reduces the zero-rate space to roughly $56,211.

If the couple still sells the full $86,400, about $30,189 of it is taxed at 15%, resulting in approximately $4,528 in new federal tax. MAGI also rises above the senior deduction phase-out threshold, which pushes even more income into the 15% band. In simple terms, every dollar of RMD displaces a dollar of gain that would otherwise have been tax-free.

Harvesting a gain means selling a position and immediately repurchasing the same shares, which resets the cost basis, meaning the purchase price used for tax purposes, to the current higher value. The wash sale rule in 26 U.S.C. § 1091(a) prevents a loss deduction if the same security is bought back within 30 days. Because that rule applies only to losses, repurchasing after selling at a gain is allowed.

Roth Conversions Compete for the Same Low-Income Years

These are also the years when many retirees consider Roth conversions. A conversion counts as ordinary income, so it raises the income floor on which capital gains are stacked. The more room conversions use, the less space remains for gains taxed at 0%. One way to compare the choices is to look at the bracket future RMDs would reach. If those withdrawals would push the couple above the 22% bracket, which begins at $100,800 of taxable income for joint filers, converting sooner often looks more attractive. A smaller IRA paired with large unrealized gains may tilt the decision toward harvesting gains instead.

Income Lines That Still Matter When Gains Are at 0%

Even gains taxed at 0% still count as income for other purposes. The net investment income tax applies to joint filers with MAGI above $250,000. For couples who receive Social Security, as much as 85% of benefits can become taxable once half of the benefits plus all other income exceeds $44,000.

Medicare premiums also depend on income. The standard Part B premium for 2026 is $202.90, while joint filers with income above $218,000 pay at least $284.10. Because the surcharge uses the tax return from two years earlier, a large gain-harvesting year can affect a later Medicare bill.

Tools That Help Preserve the Zero-Rate Space After RMDs Begin

Qualified charitable distributions, or QCDs, are gifts made directly from an IRA to a charity. They are available starting at age 70 1/2, with a 2026 limit of up to $111,000 per person. A QCD counts toward the RMD but not toward taxable income, which helps preserve the zero-rate space. Donating appreciated shares directly to charity also avoids realizing the gain. Heirs who inherit stock generally receive a basis equal to its fair market value on the date of death, which is one reason many investors hold appreciated positions rather than sell them.

A Year-End Routine Before the First RMD

For a couple in this position, the year-end process is usually straightforward. Estimate pension income, subtract deductions, and see how much room is left under the 0% capital gains threshold. Then sell long-term winners and repurchase them up to that amount while keeping an eye on the $150,000 senior deduction phase-out and the $218,000 Medicare line. These thresholds change each year, and the senior deduction is scheduled to end after 2028. Once the first RMD starts, the available room shrinks by about the size of that withdrawal.