The value of a low-income year

Before I started Mezzi, I had a year where my income dropped to almost nothing. I took some time off, my wife and I traveled, and we lived off savings. I remember treating the whole year as a financial write-off.

It wasn't. It was probably the most valuable tax year I'll ever have, and I let it pass without doing a thing.

There's a 0% bracket, and it sits higher than you'd guess

Here's what I didn't realize. Long-term capital gains have a 0% federal bracket. In 2026, a married couple with taxable income under $98,900 pays nothing on them. Not a reduced rate. Zero.

Which means that in a low-income year you can sell your winners, owe no federal tax on the gain, and buy the same fund right back that afternoon. There's no waiting period, because the wash-sale rule only applies to losses. Your cost basis resets higher, so that gain is permanently out of the system.

What $58,000 of room actually saves you

Say you and your spouse take a gap year and your taxable income lands at $40,000. That leaves about $58,000 of room under the ceiling. You sell enough of an appreciated investment (like an index fund or stock position) to fully maximize that space, then buy it right back.

Tax implications: Federal tax owed: nothing. Your state may still want a cut, so check that before you size the sale.

Sell those same shares in a normal working year and the 15% rate would likely have cost you around $8,700. (Hypothetical, for illustration.)

Microsoft just created thousands of these years

I'm thinking about this now because Microsoft recently offered a voluntary buyout to thousands of its longest-serving US employees. It wasn't open to everyone: you had to be at the senior director level or below, with your age plus your years at the company adding up to at least 70. Think a 52-year-old with 18 years in. Long careers, and a lot of vested stock.

Many of them are about to have exactly this shape of year: a spike as salary, severance and vesting stock all land together, then a lean one once it stops. Everyone will be focused on the spike. The quiet opportunity is in the year after it.

You don't need a buyout for this to apply. A sabbatical, a startup year, a stretch at home with kids, a gap between jobs: any of them can open the same window. There's more you can do in a year like this, including harvesting losses against the spike and donating appreciated shares instead of cash, and I'll come back to those. But the 0% window is the one people don't know is there.

How can Mezzi help?

Mezzi can help advise on:

• How to tax efficiently sell investments
• Diversify large, concentrated positions
• Coordinate as a team with your partner

What's important here is that you keep Mezzi in the know. Update your AI Personalization whenever life events take place.

The window closes on December 31, and only reopens if your income drops again. Worth knowing which kind of year you're in before it's over. And you can now get started with Mezzi for free—no credit card required.

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IMPORTANT DISCLOSURES

This content is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any security.

Past performance is not indicative of future results. No guarantee of future performance or outcomes is implied.

Savings and performance examples are hypothetical and for illustrative purposes only. Actual results will vary based on individual circumstances, portfolio composition, market conditions, and fees.

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