Tax Loss Harvesting Calculator
Quantify the tax benefit of harvesting unrealized losses in your portfolio. See how losses offset short-term gains, long-term gains, and up to $3,000 of ordinary income — plus estimate the value of any remaining carryforward.
Harvested Loss
Tax Rates
Capital Gains to Offset
Income & NIIT
Tax Savings Breakdown
| Category | Loss Applied | Tax Rate | Tax Saved |
|---|---|---|---|
Short-Term Gains Offset Taxed at ordinary income rates | $10,000 | 24% | $2,400 |
Long-Term Gains Offset Taxed at 0% / 15% / 20% LTCG rate | $5,000 | 15% | $750 |
Ordinary Income Deduction Up to $3,000/year if losses exceed gains | $3,000 | 24% | $720 |
State Tax Savings State rate applied to all offsets | $18,000 | 5.0% | $900 |
| Total First-Year Tax Benefit | $4,770 | ||
Carryforward Value
Your $7,000 carryforward will save an additional $1,400 in future years when used to offset capital gains (estimated at combined federal LTCG + state rate).
Even without future gains to offset, the carryforward can deduct $3,000/year from ordinary income. At your federal rate, that saves $720/year for approximately 3 more years.
Wash Sale Rule
You must wait 31 days before repurchasing substantially identical securities. This includes the same stock or fund in anyaccount (taxable, IRA, 401(k), or spouse's accounts).
Common workaround:Immediately purchase a similar but not identical fund. For example, if you sell a total stock market index fund (VTI), buy an S&P 500 fund (VOO) or a total market fund from a different provider to maintain market exposure during the 31-day window.
Efficiency Analysis
Remember: tax loss harvesting is primarily a tax deferral strategy. Your replacement investment will have a lower cost basis, resulting in higher gains when eventually sold. The benefit is the time value of the deferred tax and potentially offsetting gains taxed at higher rates (short-term) with losses from positions that would have been long-term gains at lower rates.
How Tax Loss Harvesting Works
Tax loss harvestingis the practice of selling investments at a loss to offset capital gains and reduce your tax bill. You sell the losing position, book the loss for tax purposes, and reinvest in a similar (but not “substantially identical”) security to maintain your market exposure.
Loss Offset Priority
The IRS requires losses to offset gains in a specific order. Short-term losses first offset short-term gains (taxed at your ordinary income rate). Long-term losses first offset long-term gains (taxed at 15% or 20%). After netting within each category, any remaining net loss crosses over to offset the other type. If total losses exceed total gains, up to $3,000 per year ($1,500 if married filing separately) can offset ordinary income. The rest carries forward indefinitely.
The Wash Sale Rule
You cannotrepurchase a “substantially identical” security within 30 days before or after the sale. This includes buying the same stock/fund in any account (IRA, spouse's account, etc.). Violating the wash sale rule disallows the loss and adds it to the cost basis of the replacement shares. Common workarounds: buy a similar-but-different index fund (e.g., switch from a total market fund to an S&P 500 fund) or wait 31 days.
Net Investment Income Tax (NIIT)
High earners pay an additional 3.8% NIIT on investment income above certain thresholds ($200,000 single, $250,000 married filing jointly). Capital gains are included in net investment income, so harvesting losses that reduce your net investment income can also reduce or eliminate NIIT exposure.
Important Limitations
Tax loss harvesting is a tax deferralstrategy, not a tax elimination strategy. When you reinvest in a replacement security, your new cost basis is lower, meaning you'll owe more capital gains tax when you eventually sell. The value comes from the time value of money (paying taxes later is better than paying now) and the potential to harvest at ordinary income rates but eventually pay at lower long-term capital gains rates.
Frequently Asked Questions
Can I harvest losses in my IRA or 401(k)?
No. Tax loss harvesting only works in taxable brokerage accounts. Gains and losses inside tax-advantaged accounts (IRAs, 401(k)s, HSAs) are not reported on your tax return.
Do capital loss carryforwards expire?
No. Under current law, capital loss carryforwards can be carried forward indefinitely until fully used. However, they do not carry over to a surviving spouse or estate without limitations.
Is there a limit to how much I can harvest?
There is no limit to the amount of losses you can harvest. The $3,000 limit only applies to the amount of net capital losses that can offset ordinary income in a single year. You can offset unlimited capital gains with capital losses.