Tax Loss Harvesting Calculator

Tax loss harvesting is the practice of selling investments with unrealized (paper) losses to realize those losses for tax purposes, then using the recognized losses to offset realized capital gains — reducing or eliminating the capital gains tax owed in that tax year. After selling, the investor typically buys a similar (but not substantially identical) replacement investment to maintain their desired portfolio exposure. Done strategically throughout the year, tax loss harvesting can permanently reduce a portfolio's tax burden by deferring or eliminating capital gains taxes.

The IRS requires that capital losses first offset capital gains of the same type: short-term losses offset short-term gains (taxed as ordinary income), and long-term losses offset long-term gains (taxed at preferential rates). If you have excess losses of one type, they can then offset gains of the other type. If total losses exceed total gains, up to $3,000 of net losses can offset ordinary income (wages, salaries) per year, and any remaining net losses carry forward indefinitely to future tax years.

The wash-sale rule (IRS Section 1091) disallows a realized loss if, within 30 days before or after the sale, you buy a "substantially identical" security — stocks of the same company, the same fund, or options on the same stock. If you trigger a wash sale, the disallowed loss is added to your cost basis in the replacement security rather than being deductible in the current year. To harvest a loss validly, you must either wait 31 days before rebuying, or immediately buy a similar-but-not-identical replacement (for example, selling one S&P 500 index fund and buying a different S&P 500 fund from a different provider).

Opportunity cost in tax loss harvesting refers to the potential gain you forfeit during the 30-day period you cannot hold the original position (to avoid the wash-sale rule). If the sold position rises significantly during that window, you re-enter at a higher price, permanently forgoing those gains. This calculator shows the net benefit of harvesting as tax savings minus an estimated opportunity cost, helping you weigh whether harvesting a specific position makes financial sense beyond the tax savings alone.

If your total capital losses exceed your total capital gains, you can deduct up to $3,000 of net capital losses ($1,500 if married filing separately) against ordinary income (wages, interest, etc.) in a given tax year. This is the IRS's annual loss deduction limit. Any losses above that $3,000 carry forward to future tax years indefinitely, where they can offset future capital gains or ordinary income at the same $3,000 per year rate. This carryforward feature means that large losses harvested in a bad market year continue to provide tax benefits for years afterward.

Yes — short-term losses and long-term losses have different tax values. A short-term loss directly offsets short-term gains, which are taxed as ordinary income at your highest marginal rate. A long-term loss directly offsets long-term gains, taxed at the lower capital gains rate. Because short-term losses offset income taxed at higher rates, they are generally more valuable per dollar than long-term losses. However, loss netting rules allow cross-offsetting, so long-term losses will eventually offset short-term gains if you have excess long-term losses after netting against long-term gains.

Generally no — if your current-year long-term capital gains tax rate is 0% (which applies to single filers with taxable income up to roughly $48,350 and married filers up to $96,700 in 2025), harvesting long-term losses provides no immediate benefit. However, harvesting short-term losses could still be valuable if you have short-term gains taxed at ordinary income rates. It may also be worth harvesting losses to generate a $3,000 deduction against ordinary income even without current-year gains.