Tax-Loss Harvesting & Wash-Sale Optimizer

What This Calculator Does

Designed for investors navigating year-end portfolio optimization, this calculator helps you quantify the financial impact of selling securities at a loss to offset capital gains and ordinary income. By inputting your realized gains, unrealized losses, and income profile, the tool determines your immediate tax savings and potential loss carryforward.

It specifically highlights how the IRS ordinary income deduction limit applies to your scenario and models the long-term wealth effect of reinvesting those tax savings. Whether you are rebalancing a taxable brokerage account or exploring 401(k) Match strategies, this tool provides a clear, quantitative view of your net tax alpha.

How the Math Works

The underlying logic strictly follows the capital gains netting rules established in Internal Revenue Code (IRC) Section 1222 and Section 1211(b), as reported on IRS Form 1040, Schedule D. First, the calculator offsets short-term losses against short-term gains, and long-term losses against long-term gains. If a net loss remains in one category and a net gain in the other, they are netted against each other.

If you have an overall net capital loss for the 2026 tax year, the calculator applies up to $3,000 against your ordinary income, which directly reduces your top marginal federal and state tax liability. Any remaining loss beyond this $3,000 threshold is automatically tabulated as a capital loss carryforward for future tax years. For more details on these statutory mechanisms, consult IRS Publication 550.

Worked Example

Consider an investor who earns $185,000 annually (placing them in the 24% federal marginal bracket) and lives in a state with a 6% income tax. They have realized $6,000 in short-term gains and $4,000 in long-term gains. If they decide to harvest $15,000 in unrealized losses, the calculator performs the netting process.

The $15,000 loss entirely eliminates the $6,000 short-term gain (saving $1,800 in taxes at a 30% combined rate) and the $4,000 long-term gain (saving $840 at a 21% combined rate). The remaining $5,000 loss is then used to offset $3,000 of ordinary income (saving $900), leaving a $2,000 loss carryforward for next year. In total, this strategy yields $3,540 in immediate tax savings, which can be reinvested alongside HSA Wealth contributions to compound over time.

Frequently Asked Questions