Turn Red Days Into Green Refunds.

Most investors panic when they see red. Savvy investors see a tax deduction.

When you sell an investment for a profit, you owe Capital Gains Tax (up to 23.8%). When you sell for a loss, you create a Capital Loss. This is a valuable asset that offsets your gains dollar-for-dollar.

Tax Loss Harvesting (TLH) is the proactive strategy of:

1. Selling an asset that is down to "book" the loss.
2. Immediately buying a "similar but not identical" asset.
3. Maintaining your market exposure while banking a tax deduction.

The key insight is that step two keeps you invested. Harvesting is not market timing and it is not "selling low" in any economic sense — your dollars stay in the market the entire time. The only thing that changes is the tax label on your position: an invisible paper loss becomes a realized loss the IRS lets you use.

Say you sold Stock A this year for a $50,000 gain, and Stock B is sitting at a $40,000 unrealized loss.

Same market performance. Same end-of-year portfolio value. The only difference is that the harvester clicked "sell" on the losing position, swapped into a comparable fund, and kept roughly $9,500 that the non-harvester mailed to the IRS.

The rate stack matters here. Long-term gains for high earners run 20% plus the 3.8% net investment income tax — the 23.8% figure above. Short-term gains are worse: they're taxed at ordinary rates, which can mean 37% plus the 3.8% NIIT for top-bracket households. That's why a harvested loss that offsets a short-term gain is the most valuable loss you can own.

We hear this all the time. The $3,000 figure is real, but it's the third rung on the ladder, not the first. Here's the actual ordering:

In other words: the cap only applies to losses left over after every capital gain on your return has already been wiped out — and even then, whatever the $3,000 doesn't absorb rolls forward to next year, and the year after, with no expiration date.

Harvesting earns its keep in proportion to your tax rate and your future gain pipeline. The investors who benefit most look like this:

• High marginal brackets. The same harvested dollar is worth more at 37% than at 22%. Physicians, tech employees with large RSU sales, and business owners get the biggest bang per loss.
• A known gain on the horizon. Selling a rental property, a practice, or a business in the next few years? Losses banked now neutralize that gain later.
• Large taxable (non-retirement) accounts. There is nothing to harvest inside a 401(k) or IRA — those accounts are already tax-sheltered. The strategy lives in your brokerage account.
• RSU and equity-comp households. Vesting creates constant fresh positions at varied cost bases — exactly the conditions that produce harvestable lots in any market dip.

One important flip side: if your taxable income is low enough to put you in the 0% long-term capital gains bracket in a given year — a sabbatical, an early-retirement gap year, a low-income startup year — harvesting losses can actually be the wrong move. In those years the better play is often the mirror image, gain harvesting: realizing long-term gains at a 0% rate and resetting your basis higher for free. Which side of the trade you should be on is a function of your bracket, and that's a planning conversation, not a brokerage feature.

Not sure what your marginal rate actually is once W-2 income, business income, and investment income stack up? Our tax calculator gives you a fast estimate, and a 30-minute call gets you a real answer.

1. Inventory every account first. Yours, your spouse's, IRAs, 401(k)s, HSAs, robo accounts. Wash sales are judged across all of them, so the map comes before the trade.
2. Harvest by tax lot, not by ticker. A position that's up overall can still contain individual lots bought at higher prices. Selecting specific-identification lots lets you sell only the losers inside a winning position.
3. Pick the replacement before you sell. Decide on the correlated-but-different fund in advance so you're out of the market for minutes, not days.
4. Pause dividend reinvestment on the harvested ticker for the 30-day window — in every account that holds it.
5. Log the carryforward. Losses that aren't tracked get lost when you change preparers. We maintain a running carryforward schedule for every planning client.

Done this way, harvesting becomes a repeatable year-round discipline rather than a December scramble. The biggest harvests usually happen mid-year during drawdowns, when nobody is thinking about taxes — which is exactly why having a CPA watching the calendar matters.