Capital Loss Deduction Calculator
Sold investments at a loss this year? The IRS lets those losses offset your gains dollar for dollar, then deduct up to $3,000 of any leftover net loss against ordinary income ($1,500 if married filing separately), with the rest carried forward indefinitely. This capital loss deduction calculator runs the full IRS netting order, short-term and long-term buckets separately, so your deduction and carryforward keep the right character.
Enter each bucket below. If you have not netted your gains and losses yet, our capital gains and loss calculator totals them first; if a repurchase might have triggered the wash sale rule, check the dates before counting the loss.
Educational estimate based on IRS netting rules (Topic 409, Schedule D). State rules differ; confirm large carryforwards with a tax professional.
Quick Answer
With $12,000 of short-term losses, $4,000 of short-term gains, $2,000 of long-term losses, and $6,000 of long-term gains, the IRS netting leaves a $4,000 net loss. You deduct $3,000 against ordinary income this year and carry $1,000 (short-term) forward, saving about $3,120 in tax at a 24% marginal rate.
The short version
- Order matters: losses offset gains of the same character first, then the other character, then up to $3,000 of ordinary income.
- The $3,000 cap ($1,500 married filing separately) applies only to the net loss after all gains are offset. Gains are offset without limit.
- Carryforwards keep their character: short-term stays short-term, which is valuable because it offsets high-taxed short-term gains first next year.
- Losses never expire: the carryforward rolls indefinitely until gains or annual deductions absorb it.
Worked example, run through the real tool
Pre-filled values: short-term losses $12,000, short-term gains $4,000, long-term losses $2,000, long-term gains $6,000, single filer, 24% marginal rate, 15% long-term rate.
Net short-term: $4,000 − $12,000 = -$8,000. Net long-term: $6,000 − $2,000 = +$4,000.
Cross-offset: the $8,000 ST loss absorbs the $4,000 LT gain. Net loss = $4,000, all short-term character.
Deduct $3,000 against ordinary income (from ST first). Carry forward $1,000 short-term.
Tax saved this year: $4,000 of short-term gains offset at 24% = $960; $6,000 of long-term gains offset by short-term losses at 24% = $1,440; $3,000 of ordinary income at 24% = $720. Total: $3,120. Press Calculate to reproduce every figure, including the character split of the carryforward.
The IRS netting order, step by step
The IRS does not let you pick which losses offset which gains. The order is fixed, and this tool follows it exactly:
- Net short-term separately. Short-term losses against short-term gains.
- Net long-term separately. Long-term losses against long-term gains.
- Cross-offset. A net loss in one bucket offsets a net gain in the other.
- Deduct up to $3,000 ($1,500 MFS) of any remaining net loss against ordinary income, absorbed from short-term first.
- Carry the rest forward indefinitely, keeping its short-term or long-term character.
Why the character matters: short-term losses are the valuable kind. They offset short-term gains taxed at ordinary rates up to 37%, while long-term losses offset long-term gains taxed at 0%, 15%, or 20%. A $1,000 short-term carryforward is worth more than a $1,000 long-term one, which is why the tool splits them instead of lumping one number like simpler calculators do.
Three expensive mistakes
Mistake 1: thinking the $3,000 cap applies to gains. It does not. Losses offset capital gains without any limit; the cap only bites on the net loss left after gains, and only against ordinary income. A $50,000 loss against $50,000 of gains wipes the gains out completely.
Mistake 2: harvesting without checking the wash sale. A loss disallowed under the wash sale rule never enters the netting at all. Confirm your repurchase dates before counting the loss.
Mistake 3: forgetting the carryforward on next year’s return. The IRS requires you to track it on the Capital Loss Carryover Worksheet in Publication 550. Miss a year and you can permanently lose deductions you already earned. If your loss came from a single bad year in the market, our investment growth calculator can show what staying invested would have needed to recover.
Deduction vs harvesting: the strategy view
Tax-loss harvesting is the deliberate version of this math: selling losers on purpose to manufacture the offsets the tool computes. The worked example’s $3,120 saving is the prize. To price the gains side of a harvest before you sell, our investment gain calculator estimates what each position would net after tax. But harvesting only makes sense when the economics work: do not sell a position you believe in just to book a loss, and never rebuy inside the wash sale window. For buy-and-hold investors, the deduction is a consolation for a bad year; for active harvesters, it is a planned line item. Either way, the netting order above is the law that prices it.
What competing calculators miss
Bravecalculator’s version is one subtraction with a $3,000 cap: no short-term/long-term split, no netting order, no carryforward character. Teamzlab’s carryover calculator is the strongest rival, with filing-status limits and a carryforward split, but it prices everything at one blended rate and skips the tax-savings estimate.
This page runs the complete IRS sequence: separate ST/LT netting, cross-offsetting, the $3,000 ($1,500 MFS) deduction absorbed short-term first, a character-preserving carryforward, and a tax-saved estimate that prices short-term offsets at your marginal rate and long-term offsets at your capital gains rate. The numbers match the Schedule D worksheet, line for line.
Frequently asked questions
Losses offset capital gains without limit. If losses still exceed gains, you can deduct up to $3,000 of the net loss against ordinary income per year ($1,500 if married filing separately). Anything beyond that carries forward indefinitely.
No. Unused capital losses carry forward indefinitely until gains or annual deductions absorb them. They never expire, but you must track them on the Capital Loss Carryover Worksheet each year.
Short-term applies to assets held one year or less; long-term to assets held more than one year. Each nets against gains of its own character first. Short-term losses are more valuable because they offset gains taxed at higher ordinary rates.
Yes, up to $3,000 per year ($1,500 MFS) of net capital loss can offset ordinary income like wages, after all capital gains are offset. You do not need to itemize to claim it.
No. The capital loss deduction is available whether you take the standard deduction or itemize. It reduces adjusted gross income directly.
Report sales on Form 8949 and summarize on Schedule D of Form 1040. Track unused losses year to year on the Capital Loss Carryover Worksheet in IRS Publication 550.
No. The limit is $3,000 per tax return, or $1,500 per spouse if married filing separately. Two separate returns do not double the household limit.
Yes. The IRS treats cryptocurrency as property, so realized crypto losses are capital losses subject to the same netting, $3,000 limit, and carryforward rules. Only realized losses count; paper losses do not.
You can still deduct up to $3,000 of the net loss against ordinary income ($1,500 MFS) and carry the rest forward. A $10,000 loss with no gains gives a $3,000 deduction this year and a $7,000 carryforward.
References
- Internal Revenue Service. "Topic No. 409, Capital Gains and Losses." IRS: Topic No. 409, Capital Gains and Losses (Accessed Oct 19, 2026).
- Internal Revenue Service. "Publication 550, Investment Income and Expenses (Capital Loss Carryover Worksheet)." IRS: Publication 550, Investment Income and Expenses (Accessed Oct 19, 2026).
- Internal Revenue Service. "Instructions for Schedule D (Form 1040), Capital Gains and Losses." IRS: Instructions for Schedule D (Accessed Oct 19, 2026).
- Legal Information Institute, Cornell Law School. "26 U.S. Code Section 1211 - Limitation on capital losses." Cornell LII: 26 U.S.C. Section 1211 (Accessed Oct 19, 2026).
- Legal Information Institute, Cornell Law School. "26 U.S. Code Section 1212 - Capital loss carrybacks and carryovers." Cornell LII: 26 U.S.C. Section 1212 (Accessed Oct 19, 2026).
- Internal Revenue Service. "Instructions for Form 8949, Sales and Other Dispositions of Capital Assets." IRS: Instructions for Form 8949 (Accessed Oct 19, 2026).
- Investopedia. "Capital Loss Carryover: Definition, Rules, and Example." Investopedia: Capital Loss Carryover (Accessed Oct 19, 2026).