Capital Gains Loss Harvesting Calculator
Calculate tax-loss harvesting savings — offset capital gains with realized losses, deduct up to $3,000 against ordinary income, carry forward indefinitely. The year-end ritual that saves high earners $5K-$50K+ annually.
Tax-Loss Harvesting Basics
Sell investments at a loss to offset capital gains for the year. Losses first offset same-character gains: short-term losses offset short-term gains, long-term losses offset long-term gains. Any excess loss can offset the OTHER character of gain. Remaining loss after offsetting all gains: deduct up to $3,000 against ordinary income ($1,500 if married filing separately). Excess carries forward indefinitely.
The Wash Sale Rule (IRC §1091)
Cannot claim loss on sale if you buy 'substantially identical' security 30 days before OR after the sale. Loss is disallowed and added to cost basis of replacement shares. Applies to spouse's accounts and your IRA. Workarounds: (1) Sell SPY, buy IVV — different fund, same index, not 'substantially identical'. (2) Wait 31 days. (3) Sell at year-end, buy back in January if 31+ days pass. Aggressive same-ticker swap is auditable.
Match Loss Harvesting to Tax Bracket
Most valuable in years when you have high short-term capital gains (taxed at ordinary rates 32-37%) — saving 32-37% per dollar of harvested loss. Less valuable against LTCG (15-20% rate). Worth considering in any year with $3K+ losses to deduct against ordinary income. Always harvest losses BEFORE Dec 31 — calendar year not tax year matters.
Common Loss Harvesting Mistakes
Mistake 1: triggering wash sale by buying same ticker in IRA within 30 days. Mistake 2: harvesting losses in low-income year (waste of deduction). Mistake 3: not tracking carryforwards across years on Schedule D. Mistake 4: short-term loss carryforward — eventually becomes long-term loss after carry, losing tax efficiency. Mistake 5: forgetting basis adjustment when buying back after wash.
Sources: IRC §1211, §1212 (capital losses), §1091 (wash sales). Last updated: May 2026. Not tax advice.
Frequently Asked Questions
What is tax-loss harvesting?
Selling investments at a loss to offset capital gains for the year. Excess loss up to $3,000 can offset ordinary income. Carry forward indefinitely. Year-end ritual for high earners.
What is the wash sale rule?
Cannot claim loss on sale if you buy substantially identical security 30 days before or after the sale. Loss disallowed, added to basis of new shares. Applies across spouse accounts and IRAs.
How much can I deduct against ordinary income?
Up to $3,000/year ($1,500 if married filing separately). Excess loss carries forward indefinitely. Most valuable in years with high ordinary income (32-37% bracket).
Can I sell SPY and buy IVV?
Yes \u2014 different funds tracking same index are NOT substantially identical per IRS guidance. Common workaround. Aggressive same-ticker swap within 30 days = wash sale.
Is this tool free?
Yes. 100% free, no sign-up. All math runs in your browser \u2014 your portfolio data never leaves your device. Not tax advice.