Did you know, a married couple can realize up to $124,050 in gains per year from investments and pay $0 in federal income tax?

Here’s one of the biggest “secrets” in the tax code (and how you can use it to retire early):

If your income comes from long-term capital gains (like selling index funds you’ve held > 1 year in a taxable account) you might owe nothing in federal taxes. That’s because the tax code favors long-term investors.

Here’s what I mean:

In 2024, a married couple filing jointly pays 0% tax on long-term capital gains if their taxable income is under $94,050. Pretty cool huh?

But that’s not all…

The standard tax deduction for a couple who is married filing jointly is $30,000.

$94,050 + $30,000 = $124,050 

So If you have no other income, that means we can pull out up to $124,050 in long-term gains… And owe $0 in federal income taxes.

But here’s where it gets even better…

You don’t have to withdraw the full $124,050. Some years, you might not need to spend that much. But you can still take advantage of the tax savings by doing what’s called a ‘Roth Conversion’

Let me explain:

You likely have money sitting in pre-tax accounts from your employer (like a 401(k) or Traditional IRA). Every dollar in those accounts will be taxed when you withdraw it in retirement. Unless you convert it first.

That’s where a Roth conversion comes in.

A Roth conversion means moving money from a pre-tax account into a Roth IRA and paying taxes now instead of later. Think of it as “buying” tax-free retirement income at a steep discount.

The benefit?

• Future growth is tax-free

• No required minimum distributions (RMDs)

• Gives you more control in retirement

Summary

A. Withdraw $124,050 in long-term capital gains → $0 tax

B. Convert $30,000 to Roth + $94,050 in gains → $0 tax

Either way, you control your tax bracket and keep more of your money. Like I said before, the tax code favors long-term investors.