Does the wash sale rule apply to cryptocurrency in 2026?

No. As of 2026, cryptocurrency is treated as property under the IRC, not as stock or securities. The wash sale rule (IRC Section 1091) does not apply to crypto. The OBBBA (July 2025) did not extend wash sale rules to digital assets, though multiple proposals have been introduced in Congress.

How much can I deduct in capital losses per year?

There is no limit on using capital losses to offset capital gains. After offsetting all gains, you can deduct up to $3,000 ($1,500 if married filing separately) of remaining losses against ordinary income per year. Any unused losses carry forward to future tax years indefinitely until fully used.

What are substantially identical securities?

The IRS has not provided a precise definition. Generally, buying the same stock you sold triggers a wash sale. For ETFs, buying a different ETF tracking the same index (e.g., selling VOO and buying IVV, both S&P 500) likely triggers a wash sale. Buying a different index ETF (e.g., selling an S&P 500 ETF and buying a total market ETF) is generally considered safe.

Tax-Loss Harvesting Calculator

Q: What is tax-loss harvesting?

Tax-loss harvesting is the strategy of selling investments at a loss to offset capital gains and reduce your tax bill. Losses first offset gains dollar-for-dollar (no limit), then up to $3,000 per year ($1,500 if married filing separately) can offset ordinary income. Unused losses carry forward indefinitely.

Q: What is the wash sale rule?

The wash sale rule (IRC Section 1091) prevents you from claiming a tax loss if you buy a substantially identical security within 30 days before or after the sale. The disallowed loss is added to the cost basis of the replacement shares, deferring (not eliminating) the tax benefit. The rule applies across all your accounts, including IRAs and 401(k)s.

Calculate how much you save by harvesting investment losses. Check the wash sale window before rebuying, and project multi-year carryforward benefits.

Calculate how much you save by harvesting unrealized losses against realized gains

Realized long-term gains

Assets held > 1 year, already sold

Realized short-term gains

Assets held 1 year or less, already sold

Unrealized losses available

Losses you can harvest by selling

Filing status

Gross income

For determining your marginal tax bracket

State income tax rate

CA: 13.3%, NY: 8.82%, TX/FL: 0%

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How to Use This Calculator

Harvest Opportunity tab

The default tab. Enter your realized long-term and short-term capital gains separately, along with your unrealized losses available to harvest. The calculator shows the optimal harvest amount, federal and state tax savings, and any excess losses that carry forward. Expand "More options" to adjust filing status, income, and state tax rate.

Wash Sale Guard tab

Enter the date you sold (or plan to sell) a security at a loss and select the security type. The calculator shows the 61-day wash sale window and tells you the earliest safe date to rebuy. For cryptocurrency, it confirms the current exemption from wash sale rules under IRC Section 1091.

Multi-Year Plan tab

Enter your total available losses (realized + carryforward) and expected annual capital gains. The calculator projects year-by-year how your losses offset gains and ordinary income, showing total tax savings over time. Useful for large losses from a market downturn or concentrated stock position.

Share your result

Every input is encoded in the URL. Click Share to send your exact scenario to a financial advisor or tax professional.

The Formula

Tax-loss harvesting saves taxes by offsetting gains and ordinary income:

Tax Savings = STCG Offset × Marginal Rate + LTCG Offset × LTCG Rate + Ordinary Offset × Marginal Rate + State Savings

Loss Application Order:
1. Short-term losses offset short-term gains first
2. Remaining losses offset long-term gains
3. Up to $3,000 ($1,500 MFS) offsets ordinary income
4. Excess carries forward indefinitely

Wash Sale Window = Sale Date − 30 days to Sale Date + 30 days (61-day total)

The key insight: prioritize offsetting short-term gains. They're taxed at your ordinary income rate (up to 37%) versus long-term gains (0%/15%/20%). A $10,000 short-term loss saves up to $3,700 in federal tax, while the same loss offsetting long-term gains saves at most $2,000.

Example

Priya — Software Engineer, 31, Seattle WA

Priya earns $165K (single), has $10K in long-term gains from selling index funds and $5K in short-term gains from trading individual stocks. She holds $12K in unrealized losses on tech stocks from a sector rotation. Washington has no state income tax (0%).

Harvest Opportunity tab

Realized LTCG$10,000

Realized STCG$5,000

Unrealized losses to harvest$12,000

STCG offset (at 24%)$5,000 → saves $1,200

LTCG offset (at 15%)$4,000 → saves $600

Ordinary income offset$3,000 → saves $720

Total tax savings$2,520

By harvesting $12K in tech stock losses, Priya saves $2,520 in federal taxes. She offsets all $5K in short-term gains first (higher tax rate), then $4K of long-term gains, and deducts the remaining $3K against ordinary income.

Wash Sale Guard tab

Sold NVDAMar 15, 2026

Wash sale windowFeb 13 – Apr 14

Safe to rebuy NVDAApr 15, 2026

Priya sells NVDA at a loss on March 15. She can't rebuy NVDA (or a substantially identical security) until April 15. She buys VGT (Vanguard Info Tech ETF) immediately — different enough to avoid the wash sale rule while maintaining tech sector exposure.

Multi-Year Plan tab

Total losses available$25,000

Expected gains/year$3,000

Years to fully use5 years

Total projected savings$5,880

After a rough year, Priya has $25K in realized losses. With $3K in expected annual gains, her losses offset gains + $3K ordinary income each year for 5 years, saving her nearly $5,900 in total taxes.

FAQ

What is tax-loss harvesting? ▼

Tax-loss harvesting is selling investments at a loss to offset capital gains and reduce your tax bill. Losses first offset gains dollar-for-dollar with no limit. After that, up to $3,000 per year ($1,500 if married filing separately) can offset ordinary income like salary. Unused losses carry forward indefinitely to future tax years. The strategy works best when you have realized gains to offset and can maintain similar portfolio exposure by buying a non-identical replacement investment.

What is the wash sale rule and how do I avoid it? ▼

The wash sale rule (IRC Section 1091) disallows a capital loss if you buy a "substantially identical" security within 30 days before or after the sale — a 61-day window total. To avoid it: wait 31 days before rebuying the same security, or immediately buy a similar but not identical investment (e.g., sell an S&P 500 ETF and buy a total market ETF). The rule applies across all accounts you and your spouse control, including IRAs and 401(k)s. If triggered, the loss is deferred, not permanently lost — it’s added to the cost basis of the replacement shares.

Does the wash sale rule apply to cryptocurrency? ▼

No, not as of 2026. Cryptocurrency is classified as property under the Internal Revenue Code, not as stock or securities. IRC Section 1091 (the wash sale rule) applies only to stock and securities. The OBBBA passed in July 2025 did not extend wash sale rules to digital assets. You can sell crypto at a loss and immediately rebuy the same coin. However, the IRS is building reporting infrastructure (Form 1099-DA) for crypto wash sales, and Congress has introduced multiple proposals to extend the rule. This exemption could change in future legislation.

How long can I carry forward capital losses? ▼

Capital losses carry forward indefinitely — there is no expiration. Each year, carried-forward losses first offset any capital gains, then up to $3,000 ($1,500 MFS) offsets ordinary income. Losses retain their character: short-term losses carried forward remain short-term, and long-term losses remain long-term. You report carryforward on Schedule D and the Capital Loss Carryover Worksheet.

What are the 2026 capital gains tax rates? ▼

For 2026, long-term capital gains (assets held over 1 year) are taxed at 0%, 15%, or 20% based on taxable income. Single filers: 0% up to $49,450, 15% up to $545,500, 20% above. Married filing jointly: 0% up to $98,900, 15% up to $613,700, 20% above. Short-term gains (assets held 1 year or less) are taxed at ordinary income rates (10%–37%). High earners may also owe the 3.8% Net Investment Income Tax (NIIT) on investment income above $200K (single) or $250K (MFJ).

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