How to Use the Tax-Loss Harvesting Calculator
When some of your holdings gain and others lose, US tax law lets you offset those realized gains and losses against each other before calculating what you owe. This is the core idea behind tax-loss harvesting: realizing a loss doesn't just sit there — it directly reduces the tax bill on your winning trades.
This calculator nets your total realized gains against your total realized losses. If gains still exceed losses, tax is owed only on the remaining net gain, and the losses you used reduce that tax dollar for dollar. If losses exceed gains, all gains become tax-free, and up to $3,000 of the excess loss can also offset your ordinary income for the year at your ordinary tax rate — any loss beyond that amount carries forward indefinitely to future tax years.
Many investors deliberately realize losses on underwater positions near year-end specifically to harvest this benefit. Just watch out for the IRS wash-sale rule, which disallows the loss deduction if you buy a substantially identical security within 30 days before or after the sale — so plan the timing of any repurchase carefully.
Frequently Asked Questions
Tax-loss harvesting means realizing investment losses to offset realized capital gains dollar for dollar, reducing the tax owed on those gains. If losses exceed gains, up to $3,000 of the excess can also offset ordinary income each year.
Any net capital loss beyond what offsets gains and the $3,000 ordinary income limit can be carried forward indefinitely to offset gains and ordinary income in future tax years.
Yes, tax-loss harvesting is a widely used, legitimate strategy, often done near year-end. Just be aware of the wash-sale rule, which disallows the loss if you buy a substantially identical security within 30 days before or after the sale.