Tax-Loss Harvesting Calculator
Estimate tax savings from selling losing investments. See how realized losses offset capital gains and ordinary income, with wash sale rule awareness.
About this calculator
This calculator estimates the tax savings from realizing an investment loss by applying the two-step offset order the IRS uses: a realized loss first offsets realized capital gains dollar-for-dollar, and only after gains are fully offset can up to $3,000 of the remaining loss offset ordinary income in the current tax year (the cap set by 26 U.S.C. § 1211(b) and detailed in IRS Topic No. 409) — any loss beyond that carries forward to future years. The gains-offset portion saves tax at your capital gains rate (federal long-term rate plus state rate), while the ordinary-income-offset portion saves tax at your federal marginal bracket plus state rate, since that portion is sheltering wage or other ordinary income rather than investment gains.
Because the $3,000 ordinary-income offset is a fixed annual cap regardless of how large the underlying loss is, harvesting losses well beyond your capital gains plus $3,000 stops producing additional CURRENT-year tax savings — the excess simply becomes a carryforward loss usable in future years. The calculator also flags wash-sale risk: if you plan to repurchase a substantially identical security within 30 days before or after the sale, the IRS disallows the loss entirely for tax purposes, which is why toggling that flag zeroes out the net benefit shown even though the gross tax-savings figures remain calculated for reference.
Tax Disclaimer
This calculator provides estimates based on general tax rules and may not reflect your specific situation. Tax laws vary by jurisdiction and change frequently. Consult a qualified tax professional or CPA for advice tailored to your circumstances.
Inputs
Results
Total Tax Savings
$1,870.00
≈ 14 pairs of sneakers
Figures current as of 1976. Source: 26 U.S.C. § 1211(b), Limitation on capital losses — Other taxpayers; see also IRS Topic No. 409, Capital Gains and Losses: "the amount of the excess loss that you can claim to lower your income is the lesser of $3,000 ($1,500 if married filing separately) or your total net loss."
How to Use This Calculator
- Enter the total investment loss you're considering harvesting.
- Input your federal income tax bracket and capital gains tax rate.
- Add capital gains you have to offset and your state income tax rate.
- Toggle the wash-sale risk flag if you plan to repurchase the same or substantially identical security within 30 days.
- Review Total Tax Savings, Net Benefit, and Carryforward Loss to determine whether harvesting is worth executing this year.
How the result changes with Capital Gains to Offset
| Capital Gains to Offset | Total Tax Savings |
|---|---|
| $2,500.00 | $1,370.00 |
| $3,750.00 | $1,620.00 |
| $7,500.00 | $2,225.00 |
| $12,500.00 | $2,000.00 |
What each input means
- Investment Loss Amount
- Total unrealized losses you could harvest by selling.
- Federal Tax Bracket
- Your federal marginal income tax bracket.
- Capital Gains to Offset
- Realized capital gains you want to offset this year.
- Capital Gains Tax Rate
- Your long-term capital gains rate. Most gains fall into the standard 0%, 15%, or 20% brackets; higher values up to 25% cover special cases like unrecaptured Section 1250 gain or collectibles.
- State Income Tax Rate
- Your state income tax rate (0% in some states).
- Wash Sale Risk
- Toggle on if you plan to repurchase substantially identical securities within 30 days.
How this is calculated
Worked example, using the default values
- Identify Input Parameters6 parametersInvestment Loss Amount = 10000, Federal Tax Bracket = 24, Capital Gains to Offset = 5000, Capital Gains Tax Rate = 15, State Income Tax Rate = 5, Wash Sale Risk = 0 = 6 input(s) provided
- Calculate Total Tax SavingsTotal Tax Savings1870 = $1,870
- Calculate Federal Tax SavingsFederal Tax Savings1470 = $1,470
- Calculate State Tax SavingsState Tax Savings400 = $400
Figures and sources
- $3,000 annual limit on net capital losses offsetting ordinary income (1976) — 26 U.S.C. § 1211(b), Limitation on capital losses — Other taxpayers; see also IRS Topic No. 409, Capital Gains and Losses: "the amount of the excess loss that you can claim to lower your income is the lesser of $3,000 ($1,500 if married filing separately) or your total net loss."
Engine last updated . Checked against 1 independently-derived test — how we verify calculators. Built by Paul Gunder, a software engineer, not a licensed financial, medical, or legal professional.
Frequently Asked Questions
Why does the calculator show tax savings stop increasing above a certain loss amount?
Because the tax code (26 U.S.C. § 1211(b), summarized in IRS Topic No. 409) only lets a realized loss offset capital gains and up to $3,000 of ordinary income in the same tax year. Once your harvested loss covers your capital gains to offset plus that $3,000 ordinary-income cap, any additional loss doesn't produce more CURRENT-year tax savings — it becomes a carryforward loss you can use in a future tax year instead.
What happens to a loss larger than my capital gains plus $3,000?
The excess becomes a capital loss carryforward, which you can apply against capital gains or up to $3,000 of ordinary income in future tax years, indefinitely, until it's used up. It isn't lost — it's just deferred, which is why the calculator reports a Carryforward Loss figure alongside this year's tax savings.
Why does toggling Wash Sale Risk zero out the net benefit?
The IRS wash-sale rule disallows a loss for tax purposes if you buy the same or a substantially identical security within 30 days before or after the sale that created the loss. If you plan to repurchase quickly, the loss you're counting on isn't actually deductible, so the calculator shows the gross tax savings you'd otherwise expect alongside a Net Benefit of $0 to make that risk explicit.
Does a higher federal tax bracket always increase my tax savings from harvesting?
It increases the savings from the portion of your loss that offsets ordinary income, since that offset is taxed away at your marginal bracket rate. It has no effect on the portion of your loss that offsets capital gains, which is taxed at the separate capital gains rate instead — so a higher bracket only helps if you actually have ordinary-income offset room being used (loss beyond your capital gains, up to the $3,000 cap).
Why are the capital-gains offset and ordinary-income offset taxed at different rates?
A realized loss offsetting a realized capital gain is really just netting two gains-and-losses transactions inside the capital-gains tax system, so it saves tax at your capital gains rate. A loss offsetting ordinary income (wages, interest, etc.) is sheltering a different type of income entirely, which is taxed at your ordinary marginal bracket — a typically higher rate for most taxpayers, which is part of why the $3,000 ordinary-income offset is capped while the capital-gains offset is not.
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