[Edit: Corrected the calculation to use 2024 LTCG tax bracket instead of the 2025 bracket]
The LTCG tax rate to be used takes into account all of your taxable income, not just the amount of your ordinary income. For example (for 2024), if you file Single and, your total taxable income is $70,000 and your LTCG is $30,000, $70,000 minus the 0% LTCG upper threshold of $47,020 would result in $22,975 of the LTCG being taxed at the 15% rate. Just because your ordinary taxable income is only $40,000 doesn't mean that all of your LTCG are taxed at 0%. Only the $7,025 portion between $40,000 and $47,025 is taxed at 0%.
