Tax Loss Harvesting Calculator
Calculate tax savings from harvesting investment losses
Inputs
Tax Savings Results
Max $3,000 per year against ordinary income
Can be used in future years
What is Tax Loss Harvesting?
Tax loss harvesting is a strategy where you sell investments at a loss to offset capital gains and reduce your tax liability. The losses can be used to offset gains dollar-for-dollar, and up to $3,000 per year can be deducted against ordinary income.
Key Rules:
- Wash sale rule: Can't buy the same or substantially identical security within 30 days
- $3,000 limit: Maximum $3,000 per year can offset ordinary income
- Unlimited offset: Losses can offset unlimited capital gains
- Carry forward: Excess losses carry forward to future years indefinitely
Frequently Asked Questions
What is the wash sale rule?
The wash sale rule prevents you from claiming a tax loss if you buy the same or substantially identical security within 30 days before or after the sale. You can buy a similar but different security to maintain market exposure while harvesting the loss.
Can I harvest losses in a retirement account?
No, tax loss harvesting only applies to taxable accounts. Retirement accounts (401k, IRA) are tax-advantaged, so losses don't provide tax benefits.
How long can I carry forward losses?
Capital losses can be carried forward indefinitely until fully used. There's no expiration date, so you can use them to offset future gains or deduct $3,000 per year against income.