---
title: "What Is tax-loss harvesting? | Seek First Glossary"
description: "Tax-loss harvesting means selling an investment at a loss to offset taxable gains. The wash-sale rule can disallow the loss if you buy the same or a..."
url: https://seekfirst.multisites.ai/glossary/tax-loss-harvesting
publisher: Seek First
phone: +1-866-398-4044
contact: https://seekfirst.multisites.ai/contact
---

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Tax

# tax-loss harvesting

Tax-loss harvesting means selling an investment at a loss to offset taxable gains. The wash-sale rule can disallow the loss if you buy the same or a substantially identical investment within 30 days.

**Tax-loss harvesting** means you sell an investment that is worth less than you paid, then use that loss to offset capital gains. The IRS says that if your capital losses exceed your gains, you can claim the lesser of $3,000 ($1,500 if married filing separately) or your net loss against other income. Extra loss carries forward to later years.

The catch is the wash-sale rule. The IRS says a wash sale occurs when you sell or trade stock or securities at a loss and, within 30 days before or after the sale, you buy substantially identical stock or securities. If that happens, you cannot deduct the loss on that sale.

**For example (round numbers):** you sell shares at a $10,000 loss. You also have an $8,000 gain from another sale. The loss cancels the gain, and $2,000 of loss is left to use. If you buy the same shares back on day 20, the wash-sale rule can block the loss.

Why it matters: it works only in taxable accounts. It does not remove tax. It often just moves it to a later year. It is also worth less if you plan to give shares you hold at a gain, since giving does not trigger the sale. Ask your CPA and advisor before you act.

See our [tax planning page](https://seekfirst.multisites.ai/tax-planning).

[Read nextProactive tax planning: Roth conversions, equity pay and giving, planned before tax season](https://seekfirst.multisites.ai/tax-planning)

## Related terms

-   [asset location](https://seekfirst.multisites.ai/glossary/asset-location)
-   [donating appreciated stock](https://seekfirst.multisites.ai/glossary/donating-appreciated-stock)
-   [restricted stock unit](https://seekfirst.multisites.ai/glossary/restricted-stock-unit)

## Sources

1.  [IRS: Topic no. 409, Capital gains and losses](https://www.irs.gov/taxtopics/tc409)
2.  [IRS: Publication 550 (2025), Investment Income and Expenses](https://www.irs.gov/publications/p550)

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