Crypto Tax Loss Harvesting Calculator
Tax loss harvesting lets you reduce your tax bill by realizing capital losses to offset capital gains. In the United States, capital losses offset capital gains dollar-for-dollar, with up to $3,000 of net losses deductible against ordinary income per year. This calculator shows your estimated tax savings from harvesting a given amount of losses against your existing gains, at your applicable tax rate. This is not tax advice; consult a tax professional.
Tax loss harvesting formula
Net Taxable Gain = max(0, Capital Gains - Harvestable Loss)
Excess Loss = max(0, Harvestable Loss - Capital Gains)
Ordinary Deduction = min(Excess Loss, 3,000)
Tax Before = Capital Gains x Tax Rate
Tax After = Net Taxable Gain x Tax Rate - Ordinary Deduction x Ordinary Income Rate
Tax Savings = Tax Before - Tax After
Source: IRS Publication 550 (Investment Income and Expenses) and 26 USC Section 1211 (capital loss deduction limit).
Key rules for crypto tax loss harvesting
- No wash sale rule: as of 2024, you can sell crypto at a loss and repurchase immediately. Monitor Congress for potential rule changes.
- Up to $3,000 of net capital losses ($1,500 if married filing separately) can offset ordinary income per year.
- Unused losses carry forward indefinitely to future tax years.
- Short-term losses first offset short-term gains; long-term losses first offset long-term gains. Then losses of each type can offset gains of the other type.
- Transaction fees paid to harvest losses reduce your net proceeds and increase your net loss (and therefore your tax savings).
Tax loss harvesting: frequently asked questions
What is tax loss harvesting in crypto?
Tax loss harvesting is the strategy of deliberately selling cryptocurrency positions that are at a loss to realize those losses for tax purposes. The realized losses offset capital gains elsewhere in your portfolio, reducing your overall tax bill. Unlike stocks, crypto is not subject to the IRS wash sale rule (as of 2024), so you can repurchase the same cryptocurrency immediately after selling.
How does tax loss harvesting reduce my tax bill?
Capital losses offset capital gains dollar-for-dollar. If you have $10,000 in capital gains and realize $4,000 in capital losses through harvesting, your net taxable gain is $6,000. At a 20% long-term capital gains rate, your tax bill falls from $2,000 to $1,200, saving $800. If losses exceed gains, up to $3,000 of net losses can be deducted against ordinary income per year in the US (IRS Publication 550).
Is the wash sale rule applicable to crypto?
As of 2024, the IRS wash sale rule (26 USC Section 1091) does not apply to cryptocurrency. The wash sale rule prevents claiming a loss if you repurchase a substantially identical security within 30 days before or after the sale. Because crypto is classified as property (not a security), you can sell at a loss and immediately repurchase the same coin. However, Congress has proposed extending the wash sale rule to crypto; monitor legislative changes.
Can I harvest losses to offset ordinary income?
Yes, but only up to $3,000 per year (or $1,500 if married filing separately) can be applied against ordinary income after offsetting all capital gains. Excess losses carry forward to future tax years indefinitely (IRS Publication 550). This makes harvesting losses valuable even in years when you have no capital gains.
What records do I need for tax loss harvesting?
You need records of: the date and price of each purchase (cost basis); the date and price of each sale (proceeds); the wallet or exchange where each transaction occurred. Accurate records are required to substantiate both the loss and the cost basis on your tax return. Most exchanges provide transaction histories for this purpose.
Official sources
- IRS Publication 550, Investment Income and Expenses (capital loss rules): irs.gov/publications/p550.
- 26 USC Section 1211, Limitation on capital losses: uscode.house.gov section 1211.
- IRS Virtual Currency FAQ: irs.gov virtual currency FAQ.
Reviewed by the CalculatorHub team, edited by James Graham, 14 June 2026. See our methodology.