The 0% Tax Bracket | Who Pays For College?

PAYING FOR COLLEGE: Just because you can pay for all of it doesn’t mean you should. Some financially capable families choose to have their kids carry some skin in the game:

• A manageable loan they have to own
• A real cost comparison between schools
• A financial decision that actually has stakes

They can afford to pay for everything, but they’ve also thought carefully about what they want their kids to walk away with. Even if the decision is already made, it’s not too late to have the conversation about what this season is actually supposed to teach them.

If this is a conversation you’re still figuring out, we’re happy to think through it with you. Reach out anytime.

The most practical resource for many students and parents is, “The Price You Pay for College: An Entirely New Road Map for the Biggest Financial Decision Your Family Will Ever Make” by Ron Lieber.

THE 0% TAX BRACKET: If you’re financially supporting your adult kids or gifting them money, you’re probably missing a potentially valuable tax move available to you. The IRS 2025 capital gains rates have a 0% bracket, and your adult child may qualify. Here’s how it works: A single adult earning under $49,450 pays zero federal capital gains tax. That means if you’re planning to sell appreciated stock or investments, consider gifting shares to your adult child first and letting them sell, if appropriate for your circumstances. In some cases, the federal capital gains tax rate may be 0%, but eligibility depends on income, tax status, and other applicable rules.

Example: You’re in the 20% bracket. A $50,000 gain would cost you $10,000. Gift that position to your kid who earns $40k? That same gain costs them $0.

A few important caveats:

• Gift tax rules apply
• Watch for the “kiddie tax” if your child is under 19 (or a full-time student under 24)
• Your cost basis transfers with the gift—so the gain doesn’t disappear, it just gets taxed at their rate

If you’re already writing checks to support your kids or have a generational gifting strategy in place, make sure you’re not also handing extra money to the IRS. Are you using capital gains gifting in your family’s financial plan?

HIGH INCOME AND HIGHER SPENDING: A 2025 survey (Goldman Sachs Asset Management) found that 40% of those making $500k or more reported living paycheck to paycheck. Are you surprised or not surprised?

Source: Goldman Sachs Asset Management

STARTING YOUNG WITH GENEROSITY: Consider this thought:

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