See if you’re eligible for the 0% rate on long-term gains and qualified dividends. If taxable income other than gains or dividends does not exceed $38,600 for singles… $77,200 for joint filers…then dividends and profits on the sales of assets owned for more than a year are taxed at 0% until they push you over the threshold amounts. Here are three scenarios to illustrate the rules. In the three examples, we have a married couple with $10,000 of qualified dividends and long-term gains, which are included in taxable income. In the first example, the couple has $60,000 of taxable income. The full $10,000 of gains and dividends is taxed at the 0% rate. Let’s now assume the couple has taxable income of $80,000. $7,200 of the gains and dividends ($77,200 – ($80,000 – $10,000)) gets the favorable 0% tax rate, and $2,800 is taxed at 15%. If the couple instead has $100,000 of taxable income, the 0% rate doesn’t apply and the full $10,000 of gains and dividends is taxed at 15%. Some words of caution on the 0% rate. Zero-percent-rate gains and dividends hike adjusted gross income, which can cause more of your Social Security benefits to be taxed and can squeeze some itemized write-offs, such as charitable contributions. Also, your state income tax bill may rise, as many states tax gains as ordinary income.