If your portfolio has unrealized losses and you're weighing whether to lock them in, this Tax-Efficient Harvesting Calculator runs the numbers first. Enter your original purchase price, current market value, purchase date, annual income, and any capital gains you want to offset, then click Calculate to see your federal tax savings, state tax savings, total tax savings, and a breakdown of how the loss applies to short-term gains, long-term gains, and ordinary income. The market cap growth calculator shows your projected investment value alongside market capitalization growth, year by year.
Enter your investment details and tax information to calculate the potential tax savings from harvesting investment losses.
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Harvesting a $2,500.00 long-term loss from XYZ Corp generates an estimated $675.00 in total tax savings at a 22% federal rate and 5% state rate.
| Loss Application | Amount | Tax Savings |
|---|---|---|
| Short-Term Gains Offset | $0.00 | $0.00 |
| Long-Term Gains Offset | $0.00 | $0.00 |
| Ordinary Income Offset | $0.00 | $0.00 |
| Loss Carryforward | $0.00 | $0.00 |
To ensure your loss is tax-deductible, avoid purchasing "substantially identical" securities:
Maximize the efficiency of your tax-loss harvesting:
This analysis is based on the information provided and current tax rates. The calculator assumes proper execution of tax-loss harvesting strategies while avoiding wash sale rules. The actual tax savings may vary based on your complete tax situation, future tax law changes, and market conditions. This calculator is provided for educational purposes only and should not be construed as tax or investment advice.
Our calculator helps you analyze all aspects of tax-loss harvesting and its impact on your tax liability
Instantly calculate potential tax savings from harvesting investment losses based on your tax bracket and specific situation.
Analyze how to optimally apply your losses to maximize tax benefits, with smart allocation across different types of gains and income.
Get recommendations for avoiding wash sale rule violations and maintaining market exposure with alternative investments.
Understand the tax implications of carrying forward losses that exceed the annual limit and how they can benefit you in future tax years.
Calculate potential savings across both federal and state taxes, with support for different filing statuses and income levels.
All calculations are performed in your browser. Your financial data never leaves your device, ensuring complete security and privacy.
Understanding the mechanics and implications of tax-loss harvesting
Tax-loss harvesting is a strategy that involves selling investments that have declined in value to offset capital gains taxes on other investments that have appreciated. This technique can reduce your overall tax liability while maintaining your portfolio's asset allocation and expected returns. For income investors, the dividend reinvestment calculator quantifies how reinvested dividends accelerate recovery after a drawdown.
| Tax Scenario | Without Harvesting | With Harvesting | Potential Savings |
|---|---|---|---|
| Short-Term Gains | Taxed at ordinary income rates (up to 37%) | Reduced or eliminated by losses | Up to 37% |
| Long-Term Gains | Taxed at 0%, 15%, or 20% | Reduced or eliminated by losses | Up to 20% |
| No Capital Gains | No immediate tax benefit from losses | Up to $3,000 can offset ordinary income | Varies by tax bracket |
| Losses > $3,000 | Limited annual deduction | Excess carried forward to future years | Deferred tax benefits |
Tax-loss harvesting can be particularly beneficial in certain situations: The free stock valuation calculator also shows the probability of loss and the probability of a 25%-plus gain.
During significant market corrections or bear markets when investments may be temporarily down
When you're in a higher tax bracket due to unusually high income or significant capital gains
As part of December tax planning to offset realized gains from earlier in the year
When you need to rebalance your portfolio anyway, creating an opportunity to harvest losses
When moving from one investment strategy to another or changing advisors
Everything you need to know about tax-loss harvesting and our calculator
The wash sale rule is an IRS regulation that prevents investors from claiming a tax deduction for a security sold at a loss if a "substantially identical" security is purchased within 30 days before or after the sale date.
This rule is important because:
To avoid triggering the wash sale rule while maintaining market exposure, investors typically purchase similar but not "substantially identical" securities. For example, selling an S&P 500 ETF from one provider and buying a different S&P 500 ETF from another provider, or replacing it with a total market ETF.
The IRS limits how much capital loss you can use to offset ordinary income:
This means that even if you have a large investment loss, your ability to use it to offset ordinary income (like wages) is limited to $3,000 per year. However, there's no limit on using capital losses to offset capital gains in the current tax year.
The value of tax-loss harvesting for small portfolios depends on several factors:
For small portfolios, tax-loss harvesting may still be worthwhile if:
Our calculator can help determine if the potential tax savings outweigh any transaction costs for your specific situation.
Tax-loss harvesting affects your cost basis in several ways:
It's important to understand that tax-loss harvesting doesn't eliminate taxes permanently—it defers them:
Good record-keeping is essential for tracking cost basis adjustments across multiple tax-loss harvesting transactions, especially when they involve wash sales.
No, tax-loss harvesting is not applicable in tax-advantaged retirement accounts such as:
This is because:
Tax-loss harvesting should be focused exclusively on investments held in taxable brokerage accounts. However, be aware that purchases in retirement accounts can still trigger the wash sale rule for sales at a loss in your taxable accounts.
Our calculator includes state tax considerations in the following ways:
Important considerations regarding state taxes:
For the most accurate state tax calculations, you should verify your state's specific treatment of capital losses. The calculator provides a reasonable approximation for most states, but the exact rules vary by jurisdiction.