Tax Loss Harvesting in 2026: Turn Losses Into a Tax Refund
Use our [Tax Loss Harvesting Calculator](/calculators/finance/tax-loss-harvesting-calculator) to see your exact savings.
What Is Tax Loss Harvesting?
Sell investments at a loss to offset capital gains and up to $3,000 of ordinary income per year.
Example:
- Stock A: +$15,000 gain (sold)
- Stock B: -$10,000 loss (sell to offset)
- Tax savings: $10,000 x 15% = $1,500 saved
You immediately buy a similar but not identical investment to maintain market exposure.
The Wash-Sale Rule Trap
The IRS disallows your loss if you buy the same or substantially identical security within 30 days before OR after the sale.
What you CAN do:
- Sell Vanguard S&P 500 ETF (VOO), buy iShares S&P 500 ETF (IVV) — similar not identical
- Sell Vanguard Total Market (VTI), buy Schwab Total Market (SCHB)
Set a calendar reminder for 30 days + 1 day to optionally switch back.
Tax Savings by Scenario
| Your Situation | Gains Offset | Rate | Tax Saved |
|---|---|---|---|
| Long-term gains, 22% bracket | $20,000 | 15% | $3,000 |
| Long-term gains, 32% bracket | $20,000 | 20% | $4,000 |
| Short-term gains, 24% bracket | $20,000 | 24% | $4,800 |
| Ordinary income ($3k cap) | $3,000 | 22% | $660 |
Carrying Losses Forward
Unused losses carry forward to future years — they never expire. Harvesting $25,000 in losses with only $10,000 in gains:
- $10,000 offsets gains
- $3,000 offsets ordinary income
- $12,000 carries to 2027
When TLH Does Not Make Sense
- In tax-advantaged accounts (no taxable gains to offset)
- When in the 0% capital gains bracket (income under $94,050 married)
- When loss is tiny (trading costs exceed savings)
Related Tax Tools
- [Capital Gains Tax Calculator](/calculators/finance/capital-gains-tax-calculator) — How much you owe
- [Tax Bracket Calculator](/calculators/finance/tax-bracket-calculator) — Confirm your capital gains rate
- [Roth Conversion Calculator](/calculators/finance/roth-conversion-calculator) — Combine TLH with Roth conversion