What is the annual $3,000 ordinary income tax deduction limit?

If total net capital losses exceed total capital gains, you can deduct up to $3,000 ($1,500 for MFS) against high-taxed ordinary income (W-2 salary, interest).

Do unused capital losses expire in the United States?

No, unused net capital losses carry forward to future tax years indefinitely until fully exhausted against future gains or the annual $3,000 ordinary income offset.

USAUpdated for 2026Finance

US Tax-Loss Harvesting & $3,000 Capital Loss Offset Calculator 2026

Calculate capital loss netting (short-term vs long-term), the annual $3,000 ordinary income tax deduction offset, tax savings at your marginal tax bracket, and multi-year loss carryforward.

Finance & Investment Taxes & Duties Income Tax & Brackets

Calculated Result

Current Year Direct Income Tax Saved

$720

Calculator Inputs

Short-Term Capital Gains (Assets Held <= 1 Year)

Quick select:

Realized Short-Term Capital Losses

Quick select:

Long-Term Capital Gains (Assets Held > 1 Year)

Quick select:

Realized Long-Term Capital Losses

Quick select:

Marginal Ordinary Income Tax Rate (%)

Quick select:

Current Year Direct Income Tax Saved

$720

Ordinary Income Offset (Max $3,000)

$3,000

Unused Capital Loss Carryforward

$10,000

Net Short-Term Gain/Loss

$-6,000

Net Long-Term Gain/Loss

$-7,000

Overall Net Capital Position

$-13,000

Under IRC § 1211(b), net capital losses can offset ordinary income up to a maximum of $3,000 per year ($1,500 if married filing separately). Remaining losses carry forward indefinitely.

This calculator is a mathematical model for general financial estimation, planning, and educational guidance. Results depend on your inputs and standard formulas, and do not constitute binding financial, tax, or investment advice. Always consult a qualified professional before making financial decisions.

Official Statute: Internal Revenue Code (26 U.S.C. § 1211 - Limitation on Capital Losses & § 1212 Capital Loss Carrybacks and Carryforwards)Last Verified: 2026-09-04

Calculation Methodology

Net Short-Term = ST Gains - ST Losses; Net Long-Term = LT Gains - LT Losses. Total Net Loss offsets ordinary income up to $3,000. Carryforward = max(0, Total Net Loss - $3,000).

Frequently Asked Questions

Short-term losses first offset short-term gains, and long-term losses offset long-term gains. If net losses remain in one category, they offset net gains in the other category.

Related Calculators

Recommended tools and calculators tailored to your current calculation

Explore all tools

USA

US Tax-Loss Harvesting & $3,000 Capital Loss Offset Calculator 2026

Calculator Inputs

Calculation Methodology

Frequently Asked Questions

Related Calculators

US Child Tax Credit (CTC) & Additional CTC Refund Calculator

US Earned Income Tax Credit (EITC) Refund Calculator

US Federal Income Tax & Marginal Bracket Calculator

New York State (NYS) & New York City (NYC) Resident Income Tax Calculator

US Alternative Minimum Tax (AMT) Calculator 2026

IRS Required Minimum Distribution (RMD) SECURE 2.0 Act Calculator

US State Unemployment Insurance (UI) Benefit Calculator 2026

US Capital Gains Tax Calculator (Short-Term vs. Long-Term Rates)