Last updated: January 19, 2026
Tax-loss harvesting is a strategy where you sell investments at a loss to offset capital gains, reducing your tax bill. Unused losses can often carry forward to future years.
Be aware of wash sale rules: buying a "substantially identical" security within 30 days may disallow the loss deduction.
This strategy is most valuable for high-income investors in taxable accounts. It doesn't apply in tax-advantaged accounts like IRAs.
Understanding tax-loss harvesting helps you make better investment decisions and plan for taxes. Use our portfolio risk to see how it applies to your situation.
Sell investments at a loss to offset capital gains. If losses exceed gains, deduct up to $3,000 against ordinary income. Remaining losses carry forward.
You cannot claim a loss if you buy the same or substantially identical security within 30 days before or after the sale. The loss is deferred, not lost.
Year-end is common, but harvest whenever you have gains to offset. Works best in taxable accounts, not IRAs or 401(k)s which are already tax-advantaged.
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