Tax-Loss Harvesting

A tax strategy of selling securities at a loss to offset capital gains tax liability on other investments. The loss can offset up to $3,000 of ordinary income per year, with excess carried forward.

Realized losses first offset realized capital gains dollar-for-dollar; any excess can reduce ordinary income up to an annual cap, with leftovers carried to future years. The wash-sale rule blocks the deduction if you rebuy the same or a substantially identical security within 30 days.