Tax-Loss Harvesting Potential Calculator

Calculate potential tax savings from harvesting investment losses. Offset capital gains and reduce ordinary income.

Your marginal ordinary income tax rate

Total value of taxable brokerage account

Total losses across all positions (cost basis - current value)

Losses on assets held <1 year (taxed as ordinary income)

Losses on assets held >1 year (taxed at LTCG rates)

Realized gains from previous tax year (to offset)

Projected gains to offset this year

Tax Savings = Short-Term Losses × Ordinary Rate + Long-Term Losses × LTCG Rate. Up to $3,000 can offset ordinary income/year. Remaining losses carry forward indefinitely.
$15,000 losses ($8k short-term, $7k long-term), 24% bracket, $5k gains: Offset $5k gains (save $1,200), offset $3k ordinary income (save $720), Carry forward $7k. Total savings: $1,920.

What is tax-loss harvesting?

Tax-loss harvesting is selling investments at a loss to offset capital gains or ordinary income (up to $3,000/year). You can then buy a similar (but not "substantially identical") asset to maintain market exposure. Losses first offset gains, then up to $3k of ordinary income. Remaining losses carry forward indefinitely.

What is the wash sale rule?

The wash sale rule prevents claiming a loss if you buy the same or "substantially identical" security within 30 days before or after the sale. To avoid: 1) Buy a similar (not identical) ETF, 2) Wait 31+ days to repurchase, 3) Buy the new position 31+ days before selling the old one. Violating triggers IRS disallowance of the loss.

How much can I save with tax-loss harvesting?

Savings = Loss Amount × Tax Rate. $10k in losses at 24% bracket = $2,400 tax savings. Short-term losses offset short-term gains (taxed at ordinary rates, 10-37%). Long-term losses offset long-term gains (0/15/20%). If no gains, deduct up to $3k ordinary income, carry forward the rest.

Should I harvest losses before year-end?

Yes, typically by December 31. However, you can harvest anytime markets decline. Don't let tax tail wag the dog - only harvest if you want to exit the position or can maintain exposure with a similar asset. Consider: transaction costs, wash sale risks, and whether you have gains to offset.