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How much can I deduct from tax loss harvesting?Show
Harvested losses first offset capital gains dollar-for-dollar with no limit. If losses exceed gains, up to $3,000 ($1,500 if married filing separately) can offset ordinary income each year — a fixed statutory amount that has not changed for 2026. Any remaining losses carry forward indefinitely to future tax years.
Does tax loss harvesting work for crypto?Show
Yes — and crypto has a major advantage. Currently, the wash sale rule does not apply to cryptocurrency (classified as property, not securities). You can sell Bitcoin at a loss and repurchase it immediately, preserving the loss deduction without losing market exposure.
What is the wash sale rule?Show
The IRS disallows a loss deduction if you buy a "substantially identical" security within 30 days before or after the sale. This creates a 61-day window. If triggered, the disallowed loss is added to your new shares' cost basis — it's deferred, not permanently lost.
When is the best time to harvest losses?Show
Year-end (November–December) is the most common time to capture losses before the tax year closes. However, opportunistic harvesting during market dips and systematic monthly reviews can capture losses that might otherwise recover before year-end.
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