[00:00:00] All right, welcome back to another episode. So this, in this one I wanna talk about some 100% completely tax-free income opportunities. I think this is one of the coolest things. So if you have investment income, like when there's actual income, like investment income that you're earning, that can be received 100% tax-free, that is one of the coolest things.
So that is one of the best ways to grow your wealth. There's no tax drag. Um, but I'm this, like, this episode will be pretty basic. Like you've gotta understand, like it's very important to understand like the opportunity here and what you can do as you project out your life in the long term planning, whether it's in retirement or in certain years in low income years.
There's some really cool opportunity here. So specifically I'm gonna be talking about two very specific types of income that can be 100% tax free. Under certain circumstances, and I'll explain those certain circumstances too. So I'm talking about qualified dividends. So if you [00:01:00] own like United States stock, um, like publicly traded companies and they issue dividends, those can be qualified dividends.
And that's just, that's just how the, the broker reports it. Whether it's Fidelity, Vanguard, uh, E-Trade, Robinhood, wherever you're holding your stocks, they'll report at the end of the year qualified dividends to you on a 10 99. So that's one type of income. The other type of income is long-term capital gains.
So these are just stocks that you've held. You hold 'em more than a year, and then you sell them. You realize a gain. So if you bought it for a hundred bucks, hold it for over a year, you sell it for 200, you've realized a $100 gain. And normally under certain circumstance or under like typical circumstances, you're gonna pay tax on that.
And under both of those, the qualified dividends and the long-term gains, I just mentioned, a normal tax rate up to about 200,000 of income you're paying. Um, you're paying like 15% federal tax, [00:02:00] and once it gets above that, there's some net investment income tax. You pay an extra 3.8%, and then when you get to about 400,000 of income, then you're paying.
Like a 23% tax rate on that income, qualified DI dividends and long-term gains. So here's the opportunity, and this is in the tax code. It's been there a while. In planning for 2026, I'm gonna give you the very specific income levels, like your income thresholds that you could be at and get these qualified dividends and long-term capital gains, 100% tax free.
So if you are in the 10% tax bracket or the 12% tax bracket. And your income when you file that year doesn't exceed, like it doesn't go over the 10 or 12% brackets. All of your income, if it's ordinary income, I'm gonna talk about two types of income here, ordinary income or these other qualified dividend and long-term capital, capital gain income.
If it's ordinary income, you're gonna pay the 10% tax on the first, [00:03:00] roughly 10,000. And say if you're married, you're gonna pay 12% up to like $98,900 of income. That's ordinary income, but say you have zero income for the year and your only income, so this is, it gets a little weird with tax brackets. I'm gonna give some examples here.
If your only type of income is qualified dividends and long-term capital gains. So say you have zero income to start, but then during the year you have qualified dividends, long-term capital gains. And say you earn and you're, say you're married, you file a joint tax return, and you have $98,900 of qualified dividends and long-term capital gains.
That is 100% tax free. You're in, like you fill up the 10 and 12% tax brackets, but the tax law has a completely different set of rules separate from that ordinary income. I mentioned earlier, a different set of rules. It says you can pay 0% tax. As long as you're in the 10 and 12% ordinary tax bracket ranges up to [00:04:00] 98,000.
When you're married, you can pay 0% tax qualified dividends and long-term capital gains. So here's, then you gotta start thinking of the, the pieces you gotta move around. So this is, this is where the wealth game comes into it. You think of like, okay, well I've got 50,000 of income. And so if you've got 50,000 of ordinary income, that ordinary income fills up the bucket first.
So now you can look at like, okay, now I can fill up the rest of the bucket with long-term capital gains and qualified dividends up to the 98,900 if you're married. So you got 48,000 you can receive tax free. So the planning, and I know like dividends. You need, need to have invested the cash it needs to be held, like you need to be owning these stocks to receive the dividends.
There's not as much planning with those. You don't have as much control other than just putting the cash in and waiting for the dividends. You might have a lot more control with your capital gains. Like say you're holding crypto, [00:05:00] cryptocurrency or some stocks and you wanna start offloading it over time, you can sell, you could sell like, okay, I'm gonna realize $48,000 of gain.
Maybe it's gold or silver or crypto, you can realize a certain amount of gain in a year and it can be 100% tax free. Um, so that's, that's really the planning opportunity. Now think of it if you have, if you're a business owner or we've talked about short term rental loopholes. We've talked about if you went and bought a bunch of oil and gas investments or you just you or a bunch, you have a lot of like charitable contributions and you were able to get your income really low.
Like this is where you were combining a lot of these different strategies If you got your income low or even negative. Now you're like, oh, cool. I could get my income up to that certain level, fill up the 10 and 12% brackets, fill it up with capital gains and qualified dividends, and it could be 100% tax free.
So I think that's, that's one of the coolest things. It's, so as you're doing, I [00:06:00] probably mentioned this on every episode as you're doing the income, the income tax projection for the year, and whether you're doing it yourself, we give, we give you those templates, or you've got one of our tax advisors doing it with you.
Make sure you're considering that. Like, okay, I have a low income year. What can I sell to fill, fill that up. Because you don't wanna waste your personal deductions, you don't wanna waste. I talk about wasting those low tax brackets. You don't wanna waste those. So you can use those in, in certain years. Um, but that's, that's one of the opportunities that, that's one of the strategies that I really love.
So just make sure you're taking advantage of the 100% tax free. In these certain scenarios that I've explained for qualified dividends and long-term capital gains. So that's it for today. Have a good, uh, rest of the day and we'll talk to you next week. See you.
