Tax-Loss Harvesting: How to Cut Your Tax Bill with Smart Investing

When you sell an investment at a loss, you’re not just taking a hit—you’re creating a tax-loss harvesting, a strategy that turns investment losses into tax savings by offsetting capital gains. Also known as tax harvesting, it’s not a loophole—it’s a legal, widely used tool that smart investors use every year to keep more of their money. If you’ve ever paid taxes on stock gains only to watch another holding drop in value, you’ve already seen why this matters.

Tax-loss harvesting works because the IRS lets you use capital losses, the amount you lose when selling an asset for less than you paid to cancel out capital gains, the profit you make when selling an asset for more than you paid. If your losses are bigger than your gains, you can even deduct up to $3,000 from your regular income. Any extra losses roll over to next year. This isn’t theory—it’s how people with brokerage accounts reduce their tax bills by hundreds or even thousands of dollars annually. And yes, it works whether you’re holding ETFs, individual stocks, or crypto.

But here’s the catch: you can’t just sell and buy back the same thing. The wash sale rule blocks you from repurchasing the same security within 30 days. That’s why many investors swap into similar but not identical assets—like switching from one tech ETF to another—to stay invested while still locking in the tax benefit. This is where timing and strategy matter. It’s not about timing the market—it’s about timing your taxes.

Most people think tax-loss harvesting is only for big portfolios or day traders. It’s not. If you’ve sold a stock for a profit this year—or even if you’re just watching your portfolio dip—you’re already in the game. The real question isn’t whether you can do it. It’s whether you’re doing it right. The posts below show you exactly how top investors use this tool: which platforms make it easy, how to avoid common mistakes, and when to skip it entirely. You’ll see real examples from actual portfolios, not textbook scenarios. No fluff. Just what works.