07/28/2026
Tax-loss harvesting is a smart and fully legal tax strategy that can help reduce your tax liability by selling investments that have declined in value to offset capital gains and, in some cases, ordinary income. It remains a valuable planning tool in 2026.
Tax-loss harvesting can help you:
* Offset capital gains from profitable investments, including stocks, real estate, and cryptocurrency.
* Deduct up to $3,000 in net capital losses against ordinary income each year if your losses exceed your gains.
* Carry forward any unused capital losses indefinitely to offset future gains or income, subject to IRS rules.
How to harvest tax losses while staying IRS-compliant:
* Review your portfolio for stocks, ETFs, mutual funds, cryptocurrency, or other investments currently worth less than their purchase price.
* Consider selling investments with limited long-term growth potential.
* Sell the investment to realize the capital loss. Remember, a loss is deductible only after it has been realized through a sale—it cannot be claimed while it remains an unrealized, “paper” loss.
* Be mindful of the wash-sale rule. You cannot purchase the same or a substantially identical security within 30 days before or after the sale if you want to claim the loss.
* If you want to maintain market exposure, consider purchasing a similar—but not substantially identical—investment.
* Apply your realized losses to offset capital gains during the current tax year, and carry forward any remaining losses to future years as permitted by IRS regulations.
