IRS netting rules · IRC §1211 · wash sale · carry-forward · client-side

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Tax Loss Harvesting Calculator

Sell losers to offset winners. See IRS netting rules applied, total tax saved, up to $3,000 ordinary income deduction (IRC §1211), carry-forward, and net benefit after transaction costs.

401(k) Limit 2024$23,000(+$7,500 catch-up 50+)

Roth IRA Limit$7,000(MAGI phase-out applies)

S&P 500 Avg Return~10%/yr(nominal, historical)

Harvest — worth it

Harvesting saves $1,260 in taxes this year — a net benefit of $1,240 after transaction costs.

Capital Gains

Short-Term Gains (held <1 yr)Taxed at ordinary income rates

Long-Term Gains (held >1 yr)Taxed at preferential LTCG rate

Losses Available to Harvest

Short-Term Losses AvailableFrom positions held less than 1 year

Long-Term Losses AvailableFrom positions held more than 1 year

Tax Rates & Costs

Marginal Income Tax Rate (for short-term gains)

Long-Term Capital Gains Rate

Estimated Transaction CostsBrokerage commissions + bid/ask spread estimate

Tax Without Harvesting

$2,300

22.0% on gains

Tax With Harvesting

$1,040

After netting losses

Tax Saved

$1,260

This tax year

Net Benefit

$1,240

After transaction costs

IRS Netting Rules — 3-Step Walkthrough

Step	Action	Before	Loss Used	After
1a	STCL offsets STCG	$5,000	−$3,000	$2,000
1b	Excess STCL (unused)	$0	—	$0
2a	LTCL offsets LTCG	$8,000	−$4,000	$4,000
2b	Excess LTCL (unused)	$0	—	$0
3	Cross-net excess losses	ST: $2,000 / LT: $4,000	STCL→LT / LTCL→ST	ST: $2,000 / LT: $4,000

IRS Publication 550 — Investment Income and Expenses. Same-type netting first, then cross-type.

Wash Sale Rule (IRC §1091)

Wash sale rule: do not repurchase the same or substantially identical security within 30 days before or after the sale. Consider a similar (not identical) ETF as a replacement to maintain market exposure.

Gross capital gains (before harvesting)

shortTermGains + longTermGains

$5,000 ST + $8,000 LT

= $13,000

Step 1: STCL offsets STCG

STCG − min(STCL, STCG)

$5,000 − $3,000 = $2,000

= Net STCG: $2,000

Step 2: LTCL offsets LTCG

LTCG − min(LTCL, LTCG)

$8,000 − $4,000 = $4,000

= Net LTCG: $4,000

Step 3: Cross-netting excess losses

excess STCL offsets remaining LTCG; excess LTCL offsets remaining STCG

Final ST position: $2,000 | Final LT position: $4,000

= Net taxable: ST $2,000 + LT $4,000

Net taxable gain or deductible loss (IRC §1211)

if net loss → deduct up to $3,000 from ordinary income

Taxable ST: $2,000 + Taxable LT: $4,000

= Taxable gains: $6,000

Ordinary income deduction (up to $3,000)

min(netLoss, 3000)

No net loss — deduction does not apply

= $0

Carry-forward loss (excess over $3,000)

max(0, netLoss − 3000)

No carry-forward needed

= $0

Tax saved by harvesting

taxWithout − taxWithHarvesting

$2,300 − $1,040

= $1,260

Net benefit after transaction costs

taxSaved − transactionCosts

$1,260 − $20

= +$1,240

Harvesting is worth it.

Key insight

Without harvesting, you owe $2,300 on $13,000 in gains. By harvesting available losses, IRS 3-step netting reduces your tax bill to $1,040 — saving $1,260 this year. Net benefit after transaction costs: $1,240.

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