Tax Loss Harvesting Estimator

How to Use This Tool

Follow these steps to generate accurate tax loss harvesting estimates:

1. Select your IRS filing status from the dropdown menu.
2. Enter your realized short-term capital gains (investments held less than 1 year) for the current tax year.
3. Enter your realized long-term capital gains (investments held 1 year or longer) for the current tax year.
4. Enter the total value of short-term capital losses you plan to harvest by selling underperforming assets held less than 1 year.
5. Enter the total value of long-term capital losses you plan to harvest from assets held 1 year or longer.
6. Click the Calculate Savings button to view your estimated tax savings breakdown.
7. Use the Reset button to clear all inputs and start a new calculation.

You can copy your full results to your clipboard using the copy button in the results section.

Formula and Logic

This estimator uses 2024 federal tax brackets and IRS capital loss netting rules to calculate savings:

• Short-term capital gains are taxed as ordinary income using your filing status's tax bracket.
• Long-term capital gains are taxed at preferential rates (0%, 15%, or 20%) based on your filing status and total taxable income.
• Net short-term gain/loss is calculated as: Short-Term Gains - Short-Term Losses Harvested.
• Net long-term gain/loss is calculated as: Long-Term Gains - Long-Term Losses Harvested.
• Short-term losses first offset short-term gains, then remaining losses offset long-term gains. Long-term losses follow the same offset order.
• Tax savings equal the difference between tax owed before harvesting and tax owed after applying loss offsets.

Note: This tool does not account for state income taxes, net investment income tax (NIIT), or loss carryforwards from previous years.

Practical Notes

Keep these real-world tax planning considerations in mind when using this estimator:

• Tax loss harvesting is only useful if you have realized capital gains to offset. If you have no gains, you can deduct up to $3,000 in net capital losses per year ($1,500 for married filing separately) and carry forward excess losses to future years.
• Short-term losses offset short-term gains first, which are taxed at higher ordinary income rates, making them more valuable for tax savings than long-term losses.
• Avoid wash sales: You cannot claim a loss if you repurchase the same or substantially identical asset within 30 days of selling it at a loss. The IRS will disallow the loss and add it to the cost basis of the repurchased asset.
• Long-term capital gains qualify for lower tax rates, so prioritize harvesting short-term losses first to maximize savings.
• Consult a certified public accountant (CPA) or tax professional before making large harvesting decisions, especially if you have complex investment holdings.

Why This Tool Is Useful

Tax loss harvesting can reduce your annual tax bill, but manual calculations are error-prone and time-consuming. This tool helps:

• Individual investors model different harvesting scenarios to maximize tax savings.
• Financial planners provide quick estimates to clients during tax planning meetings.
• Investors avoid over-harvesting losses that would trigger wash sale rules or exceed deductible limits.
• You understand how filing status and gain/loss types impact your final tax liability.

All calculations run locally in your browser, so no sensitive financial data is stored or transmitted to external servers.

Frequently Asked Questions

Can I harvest losses if I have no capital gains?

Yes. If your total net capital loss exceeds your capital gains, you can deduct up to $3,000 of the loss ($1,500 for married filing separately) from your ordinary income each year. Remaining losses carry forward to future tax years with no expiration date.

Does tax loss harvesting apply to retirement accounts?

No. Losses from investments held in 401(k)s, IRAs, or other tax-advantaged retirement accounts are not deductible. You can only harvest losses from taxable brokerage accounts.

How does the wash sale rule affect my harvesting strategy?

If you sell an asset at a loss and repurchase the same or substantially identical asset within 30 days (before or after the sale), the IRS disallows the loss. You must wait at least 31 days to repurchase the asset, or purchase a similar but not substantially identical asset to avoid the rule.

Additional Guidance

For most accurate results, use year-to-date gain/loss figures from your brokerage statements. Remember that this tool uses federal tax brackets only; if your state has an income tax, you may qualify for additional savings from loss harvesting. Rebalance your portfolio after harvesting to maintain your target asset allocation, as selling assets will change your portfolio's risk profile. If you have large net losses, consider spreading harvesting across multiple tax years to maximize the annual $3,000 ordinary income deduction.