Capital Gain Harvest vs Loss Harvest Calculator
Model both strategies: realize long-term gains at 0% while income is low (gain harvesting), or offset gains with losses to reduce your tax bill (loss harvesting). Applies 2026 LTCG brackets and IRC §1211 netting rules.
How Capital Gain and Loss Harvesting Works in 2026
Capital gain harvesting and tax-loss harvesting are two strategies using the same mechanism — the deliberate realization of capital gains or losses — but toward opposite goals. Loss harvesting sells underperforming positions to generate losses that offset taxable gains, reducing your 2026 tax bill. Gain harvesting intentionally realizes long-term gains when your income is low enough to qualify for the 0% LTCG rate, resetting your cost basis with no immediate tax cost.
The netting rules under IRC §1211 require short-term gains/losses to net against each other first, and long-term gains/losses to net separately. After same-type netting, a net loss in one category can offset a net gain in the other. Net losses exceeding all gains can offset up to $3,000 of ordinary income per year, with excess carrying forward indefinitely. Source: irs.gov/taxtopics/tc409, IRS Schedule D instructions. Last updated: May 2026. Note: OBBB (P.L. 119-21, signed July 4, 2025) made the 2026 LTCG rate thresholds permanent.
2026 Long-Term Capital Gain Tax Brackets
| Filing Status | 0% Rate | 15% Rate | 20% Rate | NIIT Applies If MAGI Exceeds |
|---|---|---|---|---|
| Single | Up to $47,025 | $47,025–$518,900 | Above $518,900 | $200,000 |
| Married Filing Jointly | Up to $94,050 | $94,050–$583,750 | Above $583,750 | $250,000 |
| Head of Household | Up to $63,000 | $63,000–$551,350 | Above $551,350 | $200,000 |
Remember: LTCG stacks on top of ordinary income to determine which rate applies. If your taxable ordinary income is $40,000 (single), the first $7,025 of LTCG fits in the 0% bracket ($47,025 − $40,000). Any LTCG above $7,025 is taxed at 15%. Modeling this stacking effect is essential for accurate harvesting decisions. Source: IRS Revenue Procedure 2025-40.
Gain Harvesting vs Loss Harvesting — When to Use Each
Use gain harvesting when: Your taxable income (including gains) will stay below the 0% threshold ($47,025 single / $94,050 MFJ). This applies in early retirement, low-income transition years, years with large deductions (business losses, high itemized deductions), or for children with low income (watch kiddie tax rules). You realize gains, pay zero federal tax, and immediately repurchase — resetting basis with no wash-sale risk since the rule only applies to losses. Use loss harvesting when: You have realized or unrealized gains to offset, your marginal LTCG rate is 15% or 20%, and you have positions with unrealized losses. Each dollar offset saves 15–23.8 cents (15% + up to 3.8% NIIT). Reinvest in a similar-but-not-identical fund to maintain exposure and avoid the wash-sale rule (IRC §1091). Source: irs.gov/publications/p550.
Frequently Asked Questions
What is tax-loss harvesting?
Tax-loss harvesting is selling investments at a loss to offset capital gains and reduce your tax bill. Losses first offset gains of the same type (short-term vs long-term), then net losses offset the other type. Up to $3,000 of net losses can offset ordinary income per year under IRC §1211; remaining losses carry forward. Source: IRS Publication 550.
What is gain harvesting and when should I do it?
Gain harvesting is intentionally realizing long-term capital gains when your income is low enough to qualify for the 0% LT cap gain rate (under $47,025 single / $94,050 MFJ in 2026). By recognizing gains at 0%, you reset your cost basis — reducing future gains — with no immediate tax cost.
What are the long-term capital gain tax rates for 2026?
2026 long-term capital gain rates (OBBB permanent): 0% if taxable income (including LTCG) is under $47,025 single / $94,050 MFJ; 15% if under $518,900 single / $583,750 MFJ; 20% above those thresholds. A 3.8% NIIT also applies if MAGI exceeds $200,000 (single) / $250,000 (MFJ). Source: IRS Rev. Proc. 2025-40.
How does the wash-sale rule affect loss harvesting?
The wash-sale rule (IRC §1091) disallows a loss if you buy the same or substantially identical security within 30 days before or after the sale. To preserve the loss, wait 31+ days before repurchasing, or buy a similar-but-not-identical fund immediately. The disallowed loss adjusts your cost basis in the replacement shares.
Can capital losses offset ordinary income?
Only up to $3,000 per year. After offsetting all capital gains, up to $3,000 of net capital loss reduces ordinary income (salary, self-employment, etc.) per year. Losses beyond $3,000 carry forward to future tax years without expiration. Source: IRC §1211(b), IRS Schedule D.