Tax-Loss Harvesting vs Charitable Donation
Donate appreciated stock vs harvest losses on losing positions: completely different tax mechanics. This calculator quantifies which strategy gives more bang per dollar.
| Donate Appreciated Stock | |
| Charitable deduction value | — |
| Income tax savings (ordinary bracket) | — |
| Capital gains tax avoided | — |
| Total donation tax savings | — |
| Tax-Loss Harvest | |
| Capital loss realized | — |
| Offset against $3K ordinary income | — |
| Remaining loss carryforward | — |
| Year 1 tax savings (assume offsets $3K + matching cap gains) | — |
| Do Both | |
| Combined Year 1 tax savings | — |
Two of the highest-impact year-end tax strategies are tax-loss harvesting (sell losing positions for the loss deduction) and donating appreciated stock to charity (claim deduction + skip capital gains). They target completely different tax buckets — one against capital gains/ordinary income, the other against itemized deductions. This calculator shows the individual benefit of each strategy and confirms they stack.
Donate Appreciated Stock — Double Benefit
When you donate appreciated stock held over a year to a public charity, you get TWO tax benefits: (1) a charitable deduction equal to FAIR MARKET VALUE (not basis), and (2) you completely avoid capital gains tax on the appreciation. The charity sells the stock tax-free (501(c)(3) status) and keeps the full value. AGI limits: 30% of AGI for appreciated long-term stock to public charities (with 5-year carryforward), or 50% if you elect basis-only deduction. Always donate the most-appreciated lots first to maximize gains avoidance.
Tax-Loss Harvesting — Three-Layer Benefit
Realize a capital loss and: (1) offset unlimited current-year capital gains, (2) deduct up to $3,000/year against ordinary income, (3) carry forward unlimited losses to future years. Each $3,000 ordinary offset at 32% bracket = $960 saved; each $1 of capital gain offset at 23.8% (LTCG + NIIT) = $0.238 saved. The wash-sale rule blocks repurchase of substantially identical securities within 30 days — use a similar-but-different replacement (VTI → ITOT) to maintain market exposure.
Donor-Advised Funds — Stacking Strategy
If you don't have a specific charity in mind, contribute appreciated stock to a donor-advised fund (DAF) at Fidelity, Schwab, or Vanguard. You get the immediate full deduction in the year of contribution, but the DAF distributes to charities over future years on your schedule. This 'lumps' multiple years of charitable giving into one high-income year to maximize the itemized deduction value, then takes standard deduction in subsequent years. Combine with bunching strategy for optimal multi-year tax planning. See our itemize vs standard calculator.
Last updated May 2026. Sources: IRS Pub 526.