Calculate your potential tax savings through strategic tax-loss harvesting. Optimize your investment portfolio's tax efficiency and reduce your tax liability.
Calculate potential tax savings through strategic tax-loss harvesting
Enter your investment details and tax information to calculate the potential tax savings from harvesting investment losses.
100% Free • No signup required • Instant results
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.
No sign-up • No credit card • No limits
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.
| 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:
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.
Still have questions about tax-loss harvesting?
Contact Our Team