End of year tax-free capital gain harvesting

Now that we are coming up to the end of the calendar year and 1 full year of overall market gains, it may be the time for you to lock in some long-term capital gains for free. The ability to take advantage of this depends on your income situation, and as always do your own tax strategy research.

In the US you can harvest more than $40k in long term cap gains tax-free. For 2023, individuals with taxable income below $44,625, or $89,250 for married couples, pay 0% tax for long-term capital gains. For example, if an individual made $20k in wages/tips/etc for the year and claimed the $13,850 standard deduction, they would have $6150 in taxable income for the year. This would allow them to take $38,474 in long term capital gains for free. This strategy allows for a "free reset" on the cost basis of the investment, which decreases future tax burden if additional gains are realized.

Had someone who's tax situation allows bought 1 BTC in Dec '22 for $16k, they could sell today with no tax owed on the ~$28k of long term gains. They could then rebuy immediately and their basis would then be set at the $44k buy price of today. The current highest US long-term capital gains rate is 20%, so this strategy can add up to a significant amount of tax savings if compounded over the course of multiple tax years.

This post is purely informational, and hopefully helpful to some. I make no claims to be an expert/professional, and welcome further discussion and/or correction.