Tax-Loss Harvesting Savings Calculator
Calculate tax savings from tax-loss harvesting your investments.
Get federal and state savings, ordinary-income offset, and carryforward by tax bracket.
Tax-Loss Harvesting (TLH)
TLH is the practice of selling losing investments to realize capital losses, then using those losses to offset capital gains and (up to $3,000) ordinary income. The proceeds are reinvested in similar (but not “substantially identical”) securities to maintain market exposure.
The basic formula: Tax savings = Realized loss × Marginal tax rate (federal + state)
Where loss applies first to capital gains (same character matched first), then up to $3,000/year against ordinary income, with excess carried forward indefinitely.
Loss matching priority (IRS):
- Short-term losses offset short-term gains first
- Long-term losses offset long-term gains first
- Excess of either offsets the other type
- Net loss reduces ordinary income up to $3,000/year
- Remaining loss carries forward indefinitely
Federal capital gains tax rates (2026):
| Type | Rate (Single) | Rate (Married) |
|---|---|---|
| Short-term (held < 1 year) | Marginal (10-37%) | Marginal |
| Long-term, low bracket | 0% (income < $47,025) | 0% (income < $94,050) |
| Long-term, mid bracket | 15% | 15% |
| Long-term, high bracket | 20% (income > $518,900) | 20% (income > $583,750) |
| Net Investment Income Tax | +3.8% | +3.8% (income > $200K/$250K) |
State capital gains: Most states tax capital gains as ordinary income (CA up to 13.3%, NY up to 10.9%, TX/FL/WA = 0%). Add to federal for total marginal rate.
The wash-sale rule (CRITICAL): You CANNOT deduct a loss if you buy a “substantially identical” security within 30 days before or after the sale. The wash window is 61 days total.
Wash-sale safe alternatives:
- Different ETF tracking different index (e.g., sell VTI, buy ITOT or SCHB; wait, it gets gray)
- Different sector / style (sell SPY, buy VXF mid/small)
- Wait 31+ days then re-buy original security
- Buy a related but distinct fund (sell VTI, buy VTSAX: same fund, technically identical, NOT safe)
Common TLH mistakes:
- Buying back substantially identical security within 30 days (wash-sale violation)
- Buying in spousal IRA same security (treated as you)
- Triggering short-term losses unnecessarily (worth less if matched against long-term gains)
- Forgetting state taxes (often the bigger half of total savings)
- Harvesting tiny losses that don’t offset trading costs/spreads
TLH “value-add” estimate: Annual TLH typically adds 0.5-1.5% to after-tax return, more in volatile markets. Over 30 years, this compounds significantly, but ONLY in taxable accounts. Tax-advantaged (IRA, 401k) accounts have NO TLH benefit.
Roboadvisors that do TLH automatically:
- Wealthfront (TLH on $0+, daily)
- Betterment (TLH on $0+, daily)
- Schwab Intelligent Portfolios ($50K+ for TLH)
How we build and check this calculator
This calculator runs entirely in your browser, so the numbers you enter stay on your device. The math behind it is written by hand and tested against worked examples and standard references before the page goes live.
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