Tax-Loss Harvesting Calculator

What This Calculator Does

The calculator estimates how much federal and state income tax is saved this year by selling investments at a loss when you already have realized capital gains. You enter the loss you could realize, your short-term and long-term gains for the year, your taxable ordinary income, filing status and a state rate. It shows how much of the loss offsets each type of gain, how much is deducted against ordinary income, how much carries forward to later years, and the tax saved on each piece. A final panel grows the tax saved at an assumed 8% annual return for the number of years on the slider.

It covers one tax year and assumes the sale is not a wash sale. It does not model the lower cost basis in whatever you buy with the proceeds, which is covered in the section on deferral below, and it does not model state-specific capital loss rules.

How the Math Works

The harvested loss is applied first against short-term gains, then against long-term gains, and any remainder against ordinary income up to $3,000 ($1,500 if married filing separately), the limit in IRS Publication 550 and the Schedule D instructions. What is left is the carryforward. On a real return, short-term losses first offset short-term gains and long-term losses first offset long-term gains, and only the net amounts are combined; the calculator's order matches that when the harvested loss is short-term. If the loss comes from positions held more than a year, it would offset long-term gains first, and the tax saved would be lower whenever the short-term rate is higher.

Each piece is valued at a rate. Short-term gains are taxed as ordinary income, so they are valued at your federal marginal bracket plus the 3.8% net investment income tax when income is above the threshold, plus the state rate. Long-term gains are valued at the 0%, 15% or 20% rate for your income and filing status, plus the NIIT where it applies, plus the state rate. The ordinary income deduction is valued at the federal marginal bracket plus the state rate. Brackets and capital gains bands are the 2026 figures in Rev. Proc. 2025-32; NIIT thresholds are from IRS Tax Topic 559.

These are marginal-rate estimates. The calculator uses the rate at the income you enter and does not recompute the tax when gains or the deduction would move you into a different bracket, and it applies the NIIT to the full offset rather than to the lesser of net investment income and the income above the threshold.

Worked Example

A single filer has $185,000 of taxable ordinary income, which is in the 24% federal bracket for 2026, and pays a 6% state rate. That income is below the $200,000 NIIT threshold and inside the 15% long-term band, which runs from $49,450 to $545,500 for single filers. They have $6,000 of short-term gains and $4,000 of long-term gains and harvest a $15,000 loss.

The loss offsets the $6,000 short-term gain, saving $1,800 at 30%, and the $4,000 long-term gain, saving $840 at 21%. Of the remaining $5,000, $3,000 is deducted from ordinary income, saving $900 at 30%, and $2,000 carries forward. The tax saved this year is $3,540. At the assumed 8% return, $3,540 reinvested for 20 years grows to $16,499.79. The same inputs as married filing jointly save $3,360, because $185,000 is in the 22% bracket for joint filers; as married filing separately they save $3,470, since the NIIT threshold is $125,000 and the ordinary income deduction is limited to $1,500.

2026 Thresholds the Calculator Uses

Capital gains bands are from Rev. Proc. 2025-32, NIIT thresholds from IRS Tax Topic 559, and the deduction limit from Publication 550. The IRS questions and answers on the NIIT note that its thresholds are not indexed for inflation, so while the brackets and capital gains bands rise each year, the NIIT reaches further down the income range over time.

How the Tax Saved Changes With the Size of the Loss

With the worked-example inputs held constant, each row below is the page's own calculation for a different harvested loss.

Once the gains and the $3,000 deduction are used up, extra loss adds nothing this year and goes entirely to the carryforward. Under Publication 550 a carryover keeps its character: a long-term carryover reduces next year's long-term gains before short-term gains, and it can be carried until it is used up. So the benefit of a large harvest depends on realizing gains or taking the $3,000 deduction in later years.

Deferral, Not Forgiveness

Harvesting a loss usually postpones tax rather than removing it. If you sell at a loss and buy a similar investment, the new position's cost basis is the lower price you paid, so a later sale produces a larger gain. Suppose shares bought for $1,000 are sold for $750, and a different fund is bought for $750. The $250 loss is used this year. If the new fund is later sold for $1,000, the $250 comes back as a gain. If the replacement is substantially identical and the sale is a wash sale, Publication 550 adds the $250 disallowed loss to the new basis instead; in its example, shares bought for $800 get a basis of $1,050, and the holding period of the old shares carries over.

The lasting benefit comes from three differences: the rate at which the loss is used against the rate at which the later gain is taxed (a loss used against short-term gains at 30% that returns as a long-term gain taxed at 21%, after the replacement is held more than a year, is worth the gap), the years in which the tax saved is invested, and whether the later gain is ever realized. The 8% panel counts the second of these but not the tax due when the lower-basis position is eventually sold, so it overstates the net result for anyone who later sells.

Frequently Asked Questions