A harvested loss runs through a fixed statutory sequence: it nets against gains of the same holding period first, then against the other period, then against up to $3,000 of ordinary income ($1,500 married filing separately), and anything left carries forward indefinitely with its character intact. This calculator prices each step through the federal engine, so the saving is the difference the harvest makes to your return rather than a rate multiplied by a loss.
What this includes
Short-term and long-term netting in the order §§ 1222 and 1211(b) require
The $3,000 ordinary-income allowance, halved to $1,500 for married filing separately
Losses carried in from last year, kept in their original character
The carryforward split back into short-term and long-term under § 1212(b)
Net Investment Income Tax saved as well as income tax
What it excludes
Whether two securities are “substantially identical” — no tool can decide that
State tax, which does not always allow the $3,000 federal allowance
Wash-sale basis adjustments on the replacement shares
Collectibles, section 1256 contracts and unrecaptured § 1250 gain
The 2026 rule most people get wrong: harvesting a loss against a long-term gain that is already taxed at 0% saves nothing. The value of a harvest is not the size of the loss — it is the rate on whatever the loss displaces, which is why a short-term loss against a short-term gain is usually worth the most.
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Gains already realised this year
The section 1211(b) allowance against ordinary income is $3,000 for this status.
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Wages, business profit and other ordinary income. It decides which rate the harvest actually saves.
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$
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They sit in the same preferential stack as long-term gain, so they affect which zone the gain lands in — but a capital loss cannot offset them.
Losses you could harvest
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Unrealised losses on positions held one year or less. Enter as a positive number.
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Unrealised losses on positions held more than one year.
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Schedule D line 6. A carryforward keeps its character, and short-term is the more valuable kind.
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Schedule D line 14.
The netting sequence, in statutory order
Federal tax saved this year
$900
Loss carried forward
$0
1 · Net short-term (gains less short-term losses)$5,000
2 · Net long-term (gains less long-term losses)$2,000
3 · The two categories netted$7,000
4 · Deducted against ordinary income (limit $3,000)$0
Worth your ordinary bracket rate — currently 24.0%.
5 · Carried forward — short-term$0
Character survives. Short-term carryforward shelters short-term gain, which is taxed at ordinary rates.
5 · Carried forward — long-term$0
6 · Federal tax without harvesting$19,934
6 · Federal tax after harvesting$19,034
Harvesting $6,000 of losses moves $6,000 against gains, $0 against ordinary income and $0 into the carryforward — a federal saving of $900 this year, 15.0% of every dollar harvested.
Harvesting resets your cost basis lower, so it defers tax rather than erasing it — unless the position is later given to charity or held until death, when the basis is stepped up.
Wash-sale risk checker
This is a risk checker, not a determination.Section 1091 turns on whether the replacement is “substantially identical”, and the IRS has never published a test for it. No calculator — including this one — can tell you whether two funds qualify. What this panel does is walk the ways the rule is actually triggered and report which of them you have said apply.
The window is 30 days either side of the sale.
Nothing you have told us triggers the wash-sale rule. Keep the trade confirmations for both sides. The 61-day window is checked against trade dates, not settlement dates.
Understand your result
What each size of harvest is actually worth
A single filer with $120,000 of ordinary income who has already realised $5,000 of short-term and $8,000 of long-term gains, harvesting long-term losses. Watch the saving column: it climbs while there are gains to cancel, flattens once only the $3,000 allowance is left, and then stops entirely while the carryforward column keeps growing.
Loss harvested
Offsets gains
Offsets ordinary income
Carries forward
Federal tax saved
Saved per $1
$1,000
$1,000
$0
$0
$150
15.0%
$3,000
$3,000
$0
$0
$450
15.0%
$5,000
$5,000
$0
$0
$750
15.0%
$10,000
$10,000
$0
$0
$1,680
16.8%
$15,000
$13,000
$2,000
$0
$2,804
18.7%
$20,000
$13,000
$3,000
$4,000
$3,024
15.1%
$25,000
$13,000
$3,000
$9,000
$3,024
12.1%
The last two rows are the reason this table exists. Harvesting $25,000 saves exactly the same $3,024 as harvesting $20,000. Everything above that point is a carryforward — worth having, but not worth paying spreads and trading costs to realise in December.
The sequence, and why the order matters
Section 1222 nets within each holding period first — short-term losses against short-term gains, long-term against long-term. Only what survives is netted across the two. That ordering is not cosmetic: it decides which rate your loss displaces. A short-term loss used against a short-term gain saves your full ordinary bracket rate; the same loss used against a long-term gain might save 15%, or nothing at all if the gain was already in the 0% zone.
If a net loss survives all of that, section 1211(b) lets $3,000 of it reach ordinary income — $1,500 on a married-filing-separately return. That figure has not been indexed since 1978, which is why it now shelters so little.
What is left carries forward under section 1212(b), keeping its character. The annual allowance is drawn from short-term loss before long-term loss, so a mixed carryforward gradually becomes long-term. That is a real cost, because short-term carryforward is the more valuable kind: it is the only thing that shelters short-term gain from ordinary rates.
The wash-sale rule, stated honestly
Section 1091 disallows the loss if you acquire the same or a substantially identical security within 30 days before or after the sale — a 61-day window counting the sale date. The before half is the one people miss: averaging down in the fortnight before you give up on a position triggers the rule just as a repurchase afterwards does.
Normally the disallowed loss is added to the basis of the replacement shares and the holding period carries over, so the deduction is deferred rather than lost. There is one case where it is lost outright: a purchase inside your IRA. Revenue Ruling 2008-5 disallows the loss in the taxable account and adds no basis to the IRA, so the deduction disappears permanently. The same treatment applies to a purchase by your spouse and to one by a corporation you control.
Two things trip people up quietly. Automatic dividend reinvestment is a purchase, so a single reinvested dividend inside the window disallows part of the loss — switch it off before harvesting. And options count: acquiring a call, or writing a deep-in-the-money put, is treated as acquiring the stock.
What nobody can tell you is whether a replacement fund is “substantially identical”. The IRS has never defined it for funds and has never ruled that two different issuers’ S&P 500 trackers are the same security. Practice treats two funds on the same index as risky and two on different indices as safe — but practice is not law, and a calculator that tells you otherwise is guessing.
Frequently asked questions
How does tax-loss harvesting work?
You sell a position at a loss and the loss runs through a fixed sequence: it nets against gains of the same holding period first, then against gains of the other period, then against up to $3,000 of ordinary income ($1,500 married filing separately), and whatever survives carries forward indefinitely. The saving is not the loss times a rate — it is the difference the sequence makes to your return, which is what this calculator prices.
How much tax can harvesting losses actually save?
It depends entirely on what the loss lands on. A loss that cancels a short-term gain saves your ordinary bracket rate. A loss that cancels a long-term gain saves 0%, 15% or 20% — and 0% is a real possibility, in which case harvesting saves nothing. A loss that reaches ordinary income saves your bracket rate on up to $3,000. Beyond that the loss carries forward and saves nothing this year at all.
How much capital loss can I deduct against income in a year?
$3,000 of net capital loss against ordinary income per year, or $1,500 on a married-filing-separately return. It is a per-return figure, not per spouse. Anything above it carries forward with no expiry — but the carryforward dies with the taxpayer and cannot be transferred.
What is the wash-sale rule?
Section 1091 disallows a loss if you acquire the same or a substantially identical security within 30 days before or after the sale — a 61-day window counting the sale date. The disallowed loss is normally added to the basis of the replacement shares, so the benefit is deferred rather than lost. The exception is a purchase inside an IRA: under Revenue Ruling 2008-5 the loss is disallowed and no basis is added anywhere, so the deduction is gone for good.
Can this tool tell me whether two funds are substantially identical?
No, and neither can any other tool. The IRS has never published a test for 'substantially identical' and has never ruled on whether two different issuers' S&P 500 funds qualify. The wash-sale section here is a risk checker: it enumerates the ways the rule is triggered and reports which of them you have said apply. The judgement call stays with you and your tax adviser.
Does a carried-forward loss keep its short-term or long-term character?
Yes, and it matters. A short-term carryforward offsets short-term gains, which would otherwise be taxed at your ordinary rate; a long-term carryforward offsets gains taxed at 0/15/20. Under section 1212(b) the $3,000 annual allowance is taken out of short-term loss first, which is why a mixed carryforward tends to become long-term over time.
Does harvesting inside an IRA or 401(k) do anything?
Nothing at all. Gains and losses inside a tax-deferred or tax-free account never reach your return, so there is no loss to harvest. Worse, buying the security inside your IRA within the window permanently kills a loss you harvested in your taxable account.
Is harvesting a saving or a deferral?
Mostly a deferral. Selling at a loss and buying a replacement resets your basis lower, so the gain you eventually realise is larger by the amount you harvested. It becomes a permanent saving in three cases: the rate you face later is lower than the rate you saved now, the position is given to charity, or it is held until death and the basis is stepped up.
Educational estimate only. This tool applies the federal capital-loss netting sequence and prices it through the same engine every other calculator on this site uses. It does not decide whether two securities are substantially identical, does not model state tax, and does not cover collectibles, section 1256 contracts or unrecaptured section 1250 gain. Confirm with a qualified tax professional before acting on a harvest. Full disclaimer.