Tax loss harvesting is a powerful tax strategy where you sell investments at a loss to offset capital gains and reduce your tax bill. Realized losses offset realized gains dollar-for-dollar, and up to $3,000 in excess losses can be deducted against ordinary income each year. Use this free calculator to see exactly how much you can save, understand the offset rules, and plan for loss carryforwards — all while keeping the wash sale rule in mind.
Gains & Losses
Held less than 1 year
Enter as positive number
Held more than 1 year
Enter as positive number
Tax Rates
Also used for short-term gains
Affects $3K/$1.5K deduction cap
Net capital losses carried forward from previous tax years
Offset Breakdown
Tax Calculation Detail
| Category | Without Harvesting | After Harvesting | Savings |
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Wash Sale Rule Reminder
The IRS wash sale rule disallows a loss deduction if you buy a substantially identical security within 30 days before or after the sale. This 61-day window (30 days before + sale day + 30 days after) must be clear of repurchases.
If you sell today ():
Safe to repurchase after the wash sale window closes.
Disclaimer: This calculator provides estimates for educational purposes only and does not constitute tax advice. Tax loss harvesting rules are complex and may involve state taxes, alternative minimum tax (AMT), and other considerations not covered here. Consult a qualified tax professional for advice specific to your situation.
How to Use This Tax Loss Harvesting Calculator
Tax loss harvesting is one of the most effective tax strategies available to investors with taxable brokerage accounts. By strategically selling investments at a loss, you can offset capital gains, reduce your tax bill, and even deduct losses against ordinary income. This calculator walks you through the IRS offset rules and shows you exactly how much you can save by harvesting losses in the current tax year.
Step 1: Enter Your Realized Gains and Losses
Input your realized short-term capital gains and losses (securities held less than one year) and long-term capital gains and losses (held more than one year). Enter losses as positive numbers — the calculator handles the netting. These must be realized gains and losses, meaning you have actually sold the securities, not just paper gains or losses on positions you still hold.
Step 2: Set Your Tax Rates
Enter your marginal ordinary income tax rate (which also applies to short-term capital gains) and select your long-term capital gains rate. Most taxpayers pay 15% on long-term gains, but the rate is 0% for lower incomes and 20% for higher earners. Your filing status determines whether the ordinary income deduction cap is $3,000 (single, married filing jointly, head of household) or $1,500 (married filing separately).
Step 3: Add Any Prior Year Carryforward
If you have capital loss carryforwards from previous tax years, enter the total amount. These unused losses from prior years are applied first before the current year's harvesting, following the same netting rules. Capital loss carryforwards never expire under current federal tax law and carry forward indefinitely.
Step 4: Review Your Tax Savings
The results show your tax liability with and without harvesting, the total savings, and any losses that will carry forward to next year. The offset breakdown explains exactly how short-term and long-term losses are applied step by step according to IRS rules. Pay close attention to the wash sale rule reminder — if you plan to repurchase similar securities, you must wait at least 31 days to preserve the tax benefit.
Understanding the Offset Rules
The IRS requires a specific netting process: short-term losses first offset short-term gains, and long-term losses first offset long-term gains. If one category has net losses and the other has net gains, the losses cross over to offset gains in the other category. Any remaining net losses after all offsetting can reduce ordinary income by up to $3,000 per year, with the rest carrying forward. Understanding this ordering is important because short-term gains are taxed at higher ordinary income rates while long-term gains enjoy preferential rates.
FAQ
Is this tax loss harvesting calculator free?
Yes, this calculator is completely free with no signup, no account, and no limits. Run unlimited tax loss harvesting scenarios to compare different strategies. All calculations run privately in your browser — your financial data is never sent to any server.
Is my financial data safe and private?
Absolutely. Everything runs locally in your browser using client-side JavaScript. Your gains, losses, and tax rate information are never transmitted or stored anywhere. You can disconnect from the internet and the calculator will continue working.
What is tax loss harvesting?
Tax loss harvesting is the strategy of selling investments at a loss to offset capital gains taxes. By realizing losses, you reduce your taxable gains dollar-for-dollar. If your losses exceed your gains, you can deduct up to $3,000 per year against ordinary income, with excess losses carrying forward to future tax years.
How do short-term and long-term losses offset gains?
Short-term losses first offset short-term gains (taxed at your ordinary income rate). Long-term losses first offset long-term gains (taxed at preferential 0%, 15%, or 20% rates). If losses in one category exceed gains, the remaining losses offset gains in the other category. This ordering matters because short-term and long-term gains are taxed at different rates.
What is the wash sale rule?
The wash sale rule prevents you from claiming a tax loss if you buy a substantially identical security within 30 days before or after the sale. This includes the same stock, identical mutual funds, or options on the same security. If triggered, the loss is disallowed and added to the cost basis of the replacement security.
How much in losses can I deduct against ordinary income?
If your total capital losses exceed your total capital gains, you can deduct up to $3,000 of net losses against ordinary income per year ($1,500 if married filing separately). Any remaining excess losses carry forward indefinitely to offset gains or income in future tax years.
Do capital loss carryforwards expire?
No, capital loss carryforwards do not expire under current federal tax law. They carry forward indefinitely until fully used. However, they maintain their character as short-term or long-term losses. You must use carryforward losses in the order they were incurred and report them each year on your tax return.
Can I harvest losses in a retirement account?
No, tax loss harvesting only applies to taxable investment accounts. Losses in tax-advantaged accounts like IRAs, 401(k)s, and Roth IRAs cannot be used to offset gains or income. Harvesting is exclusively a strategy for taxable brokerage accounts.