In a strong stock market year, a lesser-known strategy could help rebalance your portfolio and save taxes in the future.

This tactic, known as tax-gain harvesting, involves strategically selling the assets in your profitable brokerage account during lower-income years, such as the early years of retirement or periods of unemployment.

Through August 26, the S&P 500 was up more than 18% year to date, with strong growth in August as investors braced for interest rate cuts by the Federal Reserve in September.

“When we do that, we often try to realize those gains at 0%,” says Tommy Lucas, a certified financial planner and registered representative with Moisand Fitzgerald Tamayo in Orlando, Florida.

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Capital gains tax brackets apply to long-term capital gains or profitable assets held for more than one year. In comparison, short-term investments held for a year or less are subject to regular income taxes.

“It’s very lucrative, especially if you’re married” and file a joint tax return, Lucas said.

For 2024, you can qualify for the 0% capital gains tax rate with taxable income of up to $47,025 if you are single filer or have up to $94,050 for married couples filing jointly.

These rates apply to “taxable income,” which you calculate by subtracting the greater of the standard or itemized deductions from your adjusted gross income.

For example, a married couple earning $120,000 in 2024 could still be below the taxable income threshold of $94,050 after taking the standard deduction of $29,200.

There are several benefits to taking tax gains, experts say, including rebalancing your brokerage assets without triggering gains.

You can also reset your “basis,” or original purchase price, by selling a profitable asset and then immediately buying it back, CFP Sean Lovison, founder of Purpose Built Financial Services in the Philadelphia area, previously told CNBC.

After selling assets at a loss, the so-called wash sale rule blocks the tax break if you buy back a “substantially identical” asset within 30 days before or after the sale. However, the same rule does not apply to making a gain.

“This move can be game-changing” because it reduces future profits, especially if you sell later in years with higher earnings, says Lovison, who is also a certified public accountant.

Lucas of Moisand Fitzgerald Tamayo said the best time to make tax gains is usually in October or November, when investors can more accurately forecast their taxable income for the year.

Because making profits increases taxable income, you should “build in some buffer” to avoid the 15 percent capital gains tax cap, he said.

Typically, the tax credit is more attractive in lower-income years, such as when retiring early before reaching required minimum distributions. But younger retirees with standard health insurance may jeopardize the premium tax credit with higher incomes, Lucas warned.