Tax-Loss Harvesting (2026)

Losses are a tax asset if you use them deliberately

Selling underwater investments realizes capital losses that offset capital gains and a slice of ordinary income. Tax-loss harvesting is the practice of taking those losses in a high-income year while maintaining market exposure through careful repurchase timing or substitute securities. The math is simple; the execution requires lot tracking and wash sale discipline.

Enter realized gains, losses you plan to harvest, filing status, and marginal rate assumptions. The calculator nets categories, applies the $3,000 ordinary income cap, and estimates federal tax savings for 2026.

2026 capital gain and ordinary stacking

Long-term gains face 0%/15%/20% rates depending on taxable income; short-term gains stack as ordinary income in 2026 brackets (Rev. Proc. 2025-32). Harvesting short-term losses against short-term gains saves at your marginal ordinary rate—often higher than long-term rate savings.

How to use the calculator

Step 1 — Inventory gains YTD

Enter short-term and long-term gains already realized from brokerage 1099-B summaries.

Step 2 — Enter candidate losses

Unrealized losses you would realize by selling, split by holding period.

Step 3 — Read net position and carryforward

See remaining net loss after offsets and how much hits ordinary income via the $3,000 allowance.

Worked example

$20,000 long-term gain, $25,000 short-term loss harvested. Losses offset $20,000 gain entirely; $5,000 net loss remains. $3,000 offsets ordinary income this year; $2,000 carries forward. At 32% marginal ordinary rate, $3,000 offset saves ~$960 federal plus gain offset savings on the $20,000 matched gain.

Wash sale guardrails

Repurchasing the same stock or fund within 30 days before or after the loss sale defers the loss. Use the wash sale calculator when planning swaps between correlated ETFs. Crypto traders should verify wash rules applicable to digital assets for 2026.

Mutual fund distributions

Year-end capital gain distributions from funds can create gains you did not trade. Harvesting before distributions may pair losses against those gains—check fund ex-distribution dates.

NIIT interaction

Harvesting reduces net investment income, which can lower 3.8% NIIT when modified AGI exceeds thresholds. Large harvests in one year may reduce NIIT more than bracket savings alone.

Crypto and individual stocks

Model crypto dispositions in the crypto tax calculator. Concentrated stock positions may have trading constraints—harvesting may require accepting tracking error with substitute securities.

Carryforward planning

Losses exceeding gains plus $3,000 ordinary offset carry to future years indefinitely. Track Schedule D carryforward lines; do not assume unused losses expire.

Common mistakes

• Triggering wash sales with automatic dividend reinvestment
• Harvesting in IRAs (losses inside IRAs are not usable on Schedule D)
• Ignoring short-term vs long-term netting order
• Forgetting state tax may not follow federal loss timing

Related tools

Capital rate bands: capital gains tax calculator. Dividend income: dividend tax calculator. Year-end refund: tax refund estimator.

Year-end execution checklist

Harvest before December 31 for calendar-year recognition—settlement dates control, not trade date alone on some brokers. Watch mutual fund ex-dividend dates to avoid buying distribution you immediately receive as taxable income. Tax-managed funds may harvest internally; do not duplicate trades your fund already executed.

Donating appreciated stock instead of harvesting loss can beat selling when you itemize and want charity exposure—compare charitably inclined scenarios outside pure loss harvesting.

Tax bracket timing across years

Harvesting losses in 0% capital gain years still offsets gains; excess loss carries forward to years with higher rates—sometimes defer harvesting to match gain recognition in high-income year for maximum rate arbitrage when carryforward room exists.

Married filing separately caps net capital loss ordinary offset at $1,500 not $3,000—status choice affects harvesting benefit in year of divorce or separation.

Trusts and estates have separate capital loss limits—do not apply individual $3,000 rule to trust return planning without checking fiduciary rules.

Reading your results for tax loss harvesting

The interactive panel above shows a transparent calculation trace in cents—use it to sanity-check inputs before you rely on any number for decisions. Tax software at filing time may differ when every credit, limitation, and state conformity rule is applied in full. Treat output here as structured planning math aligned to 2026 federal reference data where noted, not as e-file output or professional advice.

When your situation includes items this specialized tool simplifies—multiple entities, prior-year carryforwards, treaty elections, or state nonconformity—layer those facts manually or with a preparer. The goal is to narrow uncertainty enough to ask better questions, not to eliminate the need for review when dollars are material.

Recordkeeping that survives scrutiny

Keep source documents (forms, statements, logs, confirmations) that support every input you typed. IRS and state audits often start from third-party reporting; your job is to reconcile 1099s, K-1s, and broker exports to the story you file. Digital backups with dates beat reconstructed spreadsheets created after an notice arrives.

For tax loss harvesting, retain worksheets year to year when carryforwards exist—loss carryovers, credit carryforwards, passive loss suspensions, and basis schedules die silently if you change preparers and lose history.

Related tools on this site

Wash sales: wash sale calculator. Capital rates: capital gains tax calculator. Crypto: crypto tax calculator.

2026 federal brackets and payroll context

Ordinary income tax brackets and standard deductions for 2026 follow IRS Rev. Proc. 2025-32 ($16,100 single / $32,200 joint standard deduction; seven marginal rates from 10% to 37%). Social Security tax applies at 6.2% on wages up to the $184,500 wage base; Medicare continues at 1.45% with Additional Medicare Tax above threshold wages. These layers stack independently from specialized rules modeled in this tax loss harvesting tool—run the federal income tax calculator when you need the full return picture.

Quarterly estimated tax may be required when withholding does not cover liability—see the quarterly estimated tax calculator. Year-end refund or balance due comparisons belong in the tax refund estimator once withholding and payments are known.

Sources and methodology

Capital loss limits are statutory. Brackets from Rev. Proc. 2025-32. Savings estimates use marginal rates you enter. Educational—not investment advice.