You sold at a loss. The market took your money — the IRS still lets you write it off, but only $3,000 of it a year against ordinary income. Everything left over carries forward indefinitely. This calculator shows what gets deducted now, what carries forward, and how long your loss pile lasts.
| Scenario | Deducted Against Ordinary Income | Carries Forward | Years at $3,000/yr (worst case) |
|---|---|---|---|
| Big loss year, $8,000 net loss | $3,000 | $5,000 | 2 |
| $250,000 net loss after netting gains | $3,000 | $247,000 | 83 |
| Prior carryforward absorbs this year's gain | $0 | $20,000 | — |
| Married filing separately ($1,500 cap) | $1,500 | $18,500 | 13 |
| Small $2,000 loss, fully deductible | $2,000 | — | — |
Every figure above is computed by the same function that runs in the calculator tab. "Years at $3,000/yr" is the worst case — it assumes you never have another capital gain. In practice a $250,000 carryforward against a portfolio that throws off gains each year clears in a handful of years, because losses absorb gains dollar-for-dollar with no $3,000 cap.
The cap only applies to ordinary income. The $3,000 limit is not a limit on how much loss you can use — it is a limit on how much you can use against wages and other ordinary income. Against capital gains, losses offset dollar-for-dollar with no ceiling. Sell $200,000 of stock at a $200,000 gain in a year you realize a $200,000 loss and you owe nothing on the gain.
Short-term losses are worth more. A short-term loss offsets short-term gain taxed at up to 37%, while a long-term loss offsets gain taxed at 20%+. That is why the ordering rules burn short-term carryover first — and why you should confirm your broker's 1099-B classified the holding period correctly before filing.
Ordering matters for one reason: tax rates. Short-term losses save you the most because they would otherwise offset short-term gains taxed as ordinary income. Long-term losses save less, because long-term gains top out at 20%. The IRS ordering rules already do this correctly — you don't elect anything — but you should verify the carryover split on your return.
This year's net result: Schedule D, line 16 (or Form 8949 totals if you file it). Prior carryforward: last year's Schedule D, line 14 — it splits into short-term and long-term columns, and both travel forward.
If you use tax software, the carryover is usually computed for you and dropped into next year's return automatically. The reason to run the numbers yourself is planning: knowing you have $60,000 of banked losses changes whether it makes sense to harvest gains in December, or to sell a concentrated position you have been putting off.
The $3,000 annual limit against ordinary income is the number everyone quotes, and it is the reason a $250,000 loss from 2022 is still sitting on some investors' returns. But the cap is only binding if you have no capital gains. In a year you realize gains, the carryforward absorbs them with no ceiling at all — which is why a large banked loss is genuinely valuable, not just a slow $3,000-a-year trickle.
That changes the planning question. If you hold a concentrated stock position with a large embedded gain, a carryforward lets you diversify without a tax bill. If you have no gains and no plans to realize any, the loss is worth roughly $660 a year at a 22% marginal rate — real, but not transformative.
One caveat worth knowing: capital losses cannot offset more than your total capital gains plus $3,000 of ordinary income in any single year, and they cannot be used against any ordinary income once you die. Unused carryforwards do not survive to your heirs — unlike assets, which get a step-up in basis.
If you sell at a loss and buy a "substantially identical" security within 30 days before or after the sale, the loss is disallowed under the wash sale rule. The disallowed amount is added to the basis of the replacement shares — so it is deferred, not lost — but it means the carryforward you expected this year may not exist.
Watch for this in tax-loss harvesting season: selling an index fund in your taxable account while your 401(k) automatically buys the same fund on the same day is a classic accidental wash sale. The 30-day window spans both directions, so a purchase on December 15 followed by a sale on January 10 is caught.
No. Unused capital losses carry forward indefinitely with no expiration date, keeping their short-term or long-term character each year. They die with you though — they are not inheritable, and any remaining balance is lost at death.
Yes, if you have capital gains. The $3,000 limit applies only to the deduction against ordinary income. Against capital gains the offset is dollar-for-dollar with no ceiling, so a $50,000 carryforward can wipe out a $50,000 gain in a single year.
The annual ordinary-income deduction drops to $1,500 for married filing separately. Additionally, if either spouse claims a capital loss, both must generally use the married-filing-separately status, and each is limited to $1,500.
You must apply it to the extent of your gains plus the $3,000 deduction — it is not elective. You file Schedule D and the carryover is consumed automatically each year, which is why tracking it correctly matters.
Only up to $3,000 per year ($1,500 MFS). Beyond that, the loss cannot touch wages, self-employment income, IRA distributions, or Social Security. It can only offset capital gains or that capped slice of ordinary income.
⚠️ Educational estimate only. This calculator models the federal capital loss rules as of the 2026 tax year and does not account for state treatment, the interaction with the 3.8% net investment income tax, or basis adjustments from wash sales. Your actual carryover depends on your complete return — confirm with a tax professional or by reviewing Schedule D line 14 from last year.