The order is the whole answer
Harvesting a loss looks like one move, but the year it lands in is worked out in a fixed order, and the order decides what the loss is worth. First the two sides net on their own: short-term gains against short-term losses, long-term against long-term, because the two kinds of gain are taxed at different rates and the law keeps them apart until each side has settled. Only when one side is left with a shortfall does it cross over to the other side's gain. What is left after that crossing, if the whole year ends below zero, is a net capital loss, and only a net capital loss reaches the next two steps.
This page follows that sequence rather than the shortcut of adding every gain and every loss into one figure. The shortcut gives the same net for the year, so it looks harmless, but it loses the two things that matter after it: how much of a net loss can come off other income, and what character travels forward. The netting line under the result prints both sides as they stood before the crossing, so the order is visible rather than implied.
Up to $3,000, and only against other income
A capital loss has no limit when it is used against a capital gain. Ten thousand of gain can be cancelled by ten thousand of loss, and a hundred thousand by a hundred thousand, dollar for dollar. The limit people mean when they say "the $3,000 rule" applies to the last step only: a net loss left over after every gain has been absorbed can come off other income — wages, interest, a pension — up to 3,000.00 a year, or 1,500.00 for a married person filing separately. The figure is written into the statute as a plain number and is not adjusted for inflation, so it has stayed at 3,000.00 while everything around it has grown.
Two things follow from that, and both are on the page. The first is that the offset is the smaller of the net loss and the allowance, so a year that ends 5,000.00 below zero uses 3,000.00 and carries 2,000.00, while a year that ends 2,000.00 below zero uses all of it and carries nothing. The second is that the offset changes what survives: the allowance is charged against the short-term loss first, which leaves a carryforward shaped differently than a reader might expect. Type a loss on both sides and the page prints which part went to the offset and which part stayed.
The carryforward keeps its character
The part of a net loss that no current year can use does not vanish and does not expire — for an individual it rolls forward until it is used up. What it does keep is its character: a short-term carryforward arrives in the next year as a short-term loss, a long-term one as a long-term loss, and each is netted first against gains of its own kind. That is the sentence the calculators that rank for this question leave out, and it changes the answer, because a dollar of short-term carryforward can cancel income taxed at your ordinary rate while a dollar of long-term carryforward can only cancel a gain taxed at the long-term rate. The same dollar of loss, worth two different amounts, depending on which side it came from.
The page puts both parts of the carryforward on its own line and, if you have typed the two rates, prices each one against a matching gain next year. It is the reason the ordering matters at the end and not just at the start: two years identical in net loss can carry forward very different splits, and the split is what the next year spends.
Worked example
A short-term gain and a long-term loss. 10,000.00 of short-term gain, no short-term loss, no long-term gain, 15,000.00 of long-term loss, single, 24.00% ordinary and 15.00% long-term typed in.
Short term is 10,000.00 − 0.00 = 10,000.00; long term is 0.00 − 15,000.00 = −15,000.00. The long-term side carries the loss, so it is the long-term loss that crosses: 10,000.00 of it comes off the short-term gain, leaving short term 0.00 and long term −5,000.00, a net for the year of −5,000.00. That is a net capital loss of 5,000.00: the smaller of 5,000.00 and the 3,000.00 allowance, 3,000.00, comes off other income, and 2,000.00 carries forward — all of it long-term, because the short side was a gain and had nothing to carry.
The money: without the harvest the 10,000.00 short-term gain would have cost 10,000.00 × 24.00% = 2,400.00; with it, that gain is gone and the tax on gains is 0.00, so 2,400.00 is saved there. The 3,000.00 offset against other income saves 3,000.00 × 24.00% = 720.00. Saved this year in all: 3,120.00. The 2,000.00 carried forward is not counted in that figure, because it has not been used yet — it will cancel a long-term gain at 15.00% when it is, worth 300.00 at that rate.
A loss on both sides. 10,000.00 of short-term loss and 20,000.00 of long-term loss, no gains, 32.00% ordinary and 15.00% long-term. Nothing crosses, because both sides are losses; the two add to a net loss of 30,000.00. The 3,000.00 offset is charged against the short-term loss first, which leaves the carryforward as 7,000.00 short-term and 20,000.00 long-term, 27,000.00 in all. The offset saves 3,000.00 × 32.00% = 960.00 this year. Next year the 7,000.00 short-term part can cancel a short-term gain at 32.00%, worth 2,240.00, while the 20,000.00 long-term part cancels a long-term gain at 15.00%, worth 3,000.00 — the same 27,000.00, split into two very different tools.
A loss smaller than the gain. 4,000.00 of short-term gain and 1,000.00 of long-term loss, 24.00% and 15.00%. The long-term loss crosses and takes 1,000.00 off the short-term gain, leaving a net gain of 3,000.00 standing. Tax on it is 3,000.00 × 24.00% = 720.00, where the same gains with nothing harvested would have cost 4,000.00 × 24.00% = 960.00, so 240.00 is saved. There is no ordinary-income offset, because the year did not end below zero — and 3,000.00 more of loss would bring the year to zero, while 6,000.00 in all is what the year could use before the rest only carried forward.
Married filing separately. A 5,000.00 short-term loss and nothing else, 22.00% typed in. The allowance is halved to 1,500.00, so the offset saves 1,500.00 × 22.00% = 330.00 and 3,500.00 of short-term loss carries forward. The same loss on a joint return would have used 3,000.00 and carried 2,000.00.
Every figure above is printed under the calculator with your own numbers in it when you run the same inputs.
What this page does not do
- No rate table and no bracket. The two rates are yours to type; the page holds no schedule and does not know your income. It also does not decide whether a position was held long enough to be long term — you enter gains and losses on the side they already belong to.
- No wash-sale judgment. A loss disallowed by a repurchase inside the 61-day window never reaches this sum. Type only the loss you can actually claim, and use the wash sale cost basis page to work out how much of it survives and what the replacement shares cost afterwards.
- No state layer. Everything here is the federal figure. A state that taxes gains runs on its own rules, and the pages that work those out are the long-term gains page and the tax by state page.
- No low-income adjustment. The offset against other income is capped again by the income actually there to absorb it; a year whose other income is below the figure simply cannot use all of it, and the worksheet in the Schedule D instructions gives the exact carryover in that case. This page deducts the full offset and carries the rest.
- One year at a time. The four boxes are this year's amounts. A loss carried in from an earlier year is entered as this year's loss on the side that matches its character; the page does not hold a running balance across years.
- No minimum tax, no surtax. Nothing here computes the alternative minimum tax or the surtax on net investment income; those sit on top of the figures on this page, not inside them.
- No price data. There is no quote feed and no broker connection. Every figure was typed by you and nothing is fetched.
- No account, nothing emailed, nothing saved. There is no sign-in and nothing you type leaves the browser.
- No advice. The page gives the arithmetic of a net loss, not a recommendation, and it has no view on whether selling a particular holding is worth doing. A harvested loss is not free money: it lowers what the position cost, so the same gain can come back in a later year.
Rounding
Figures are rounded down, never up, the same rule as the rest of the site: every money figure to two decimals, cut off at that point rather than brought to the nearest. Each line of the working is worked out from the line above it exactly as that line is printed, so checking the sum with the figures on screen lands on the printed answer. A figure you reconstruct by hand can land a cent above the printed one, never below it.
Frequently asked questions
Does the $3,000 limit apply to my gains?
No, and that is the most common misunderstanding about harvesting. Capital losses are used against capital gains with no ceiling at all — a loss cancels a gain of the same kind dollar for dollar, and a shortfall on one side crosses to the other. The 3,000.00 figure governs only the last step, where a leftover net loss comes off ordinary income such as wages. So a 20,000.00 gain can be cancelled by a 20,000.00 loss even though the allowance is 3,000.00.
Can I use a loss against my salary?
Only up to the allowance, and only once every capital gain that year has already been absorbed. A net capital loss of 8,000.00 in a year with no gains takes 3,000.00 off other income and carries 5,000.00 forward; the same 8,000.00 in a year with 50,000.00 of gains is spent entirely against those gains and leaves nothing for the allowance. The order is gains first, then other income, then the carryforward.
Does a capital loss carryforward expire?
Not for an individual. A carryforward rolls forward year after year until it is used up, keeping its character: a short-term carryforward stays short-term and is netted first against short-term gains, a long-term one against long-term gains. There is no carryback, and no election to hold a carryforward back for a year in which it would be worth more — it is applied to the first gains that arrive, whether or not that is the best use of it.
Why does the page split the carryforward into two figures?
Because the two parts are worth different amounts next year. A short-term carryforward can cancel a short-term gain taxed at your ordinary rate, which can be up to 37%, while a long-term carryforward can only cancel a long-term gain taxed at the long-term rate, which can be 0%, 15% or 20%. The split also depends on the order this page follows: the 3,000.00 taken off other income is charged against the short-term loss first, so a year with losses on both sides carries forward less on the short side and the same on the long side. Run the figures and both parts are printed separately.
Does this replace the wash sale rule?
No, and the two have to be used together. A loss only counts if it was not replaced by substantially identical shares within 30 days either side of the sale, and a disallowed loss never reaches the netting on this page — it is added to the cost of the replacement shares instead. Enter the loss you can claim, work out what is disallowed on the wash sale page, and the two pages together describe one sale.
Is a harvested loss free money?
No. It reduces this year's tax, but it also lowers what the position cost, so the gain it would have produced later comes back larger by the same amount. The saving is a deferral of tax, not its disappearance. That is why the page prints what the year saved rather than a total benefit: the 3,120.00 in the first example is real tax not paid this year, and the 2,000.00 carried forward is still waiting to be used, against a basis that is 2,000.00 lower than it would otherwise have been.