What tax-loss harvesting is
If some of your investments in a taxable account are worth less than you paid, selling them "realizes" the loss. Realized losses offset realized gains, and if your losses are larger than your gains, part of the net loss can reduce your other income. Doing this before December 31 counts for the 2026 tax year. This calculator estimates the federal tax you could save and shows the wash sale rule that can cancel the benefit.
The IRS rules the calculator follows
- Short-term and long-term. Short-term means you held the investment one year or less; long-term, more than one year. Short-term losses first offset short-term gains, and long-term losses offset long-term gains; what is left in one group offsets the other.
- The $3,000 limit. If you have a net capital loss, you can deduct the lesser of $3,000 ($1,500 if married filing separately) or your total net loss from other income. The rest carries forward to later years (IRS Topic 409).
- The wash sale rule. A wash sale occurs when you sell stock or securities at a loss and within 30 days before or after the sale you buy substantially identical stock or securities, including in your IRA or Roth IRA, or your spouse does. You cannot deduct that loss; it is added to the cost of the new shares instead (IRS Publication 550).
How the estimate works
- Tax without selling = short-term gains × your ordinary bracket + long-term gains × your long-term rate.
- Tax after selling = the same on what is left after netting; if the result is a net loss, the deduction (up to $3,000) × your ordinary bracket is a saving.
- Tax saved = the difference. If you answer "Yes" to the wash sale question, the losses are not counted.
An example
You have $2,000 of short-term gains and $5,000 of long-term gains this year, and you could sell investments with $4,000 of short-term losses and $6,000 of long-term losses. In the 22% bracket with a 15% long-term rate, your gains would cost $440 + $750 = $1,190 in federal tax. After selling, the net result is a $3,000 loss: the gains are wiped out and $3,000 reduces your other income, saving another $660. The estimated saving is $1,850, and nothing carries over.
Things to know before you sell
- Only taxable accounts count: gains and losses inside an IRA or 401(k) are not reported this way.
- A loss sale is a real sale: think about whether you still want the investment, and how you will stay invested without a wash sale.
- Your broker reports sales on Form 1099-B, and you report them on Form 8949 and Schedule D.
- See the rates on gains with the capital gains tax calculator and other year-end steps in the year-end tax checklist.
Frequently asked questions
How much of a capital loss can I deduct?
After losses offset your gains, up to $3,000 of a net loss ($1,500 if married filing separately) reduces other income each year. The rest carries forward.
What is a wash sale?
Selling at a loss and buying substantially identical stock or securities within 30 days before or after the sale. The loss is not deductible then; it is added to the cost of the new shares.
Does buying in my IRA trigger a wash sale?
Yes. IRS Publication 550 lists buying substantially identical stock for your IRA or Roth IRA as a wash sale.
When is the deadline?
For the 2026 tax year, sales must happen by December 31, 2026. Ask your broker about its cut-off times.
Is my information saved?
No. The numbers stay in your browser and are not sent to us.