Stock Expert AI
Equity research screen

Tax-Loss Harvesting Guide

Tax-loss harvesting is a strategy used by investors to reduce their tax burden by selling losing investments to offset capital gains. This guide provides a detailed overview of tax-loss harvesting, including how it works, its benefits and limitations, and practical steps for implementation. It also highlights key considerations and potential pitfalls to avoid, enabling investors to make informed decisions about incorporating this strategy into their overall investment plan. This guide aims to provide actionable insights for optimizing after-tax investment returns.

Quick Answer This guide explains tax-loss harvesting, a strategy to lower your tax bill by selling investments that have lost value to offset capital gains. The guide details implementation, including avoiding the 'wash sale' rule by purchasing similar, but not identical, assets within 30 days. A sample portfolio includes VTI, VXUS, and BND ETFs for broad market exposure.
Examples3Screens60Average P/E26.3Updated2026-09-03
Data sources: Financial Modeling Prep | Yahoo Finance | SEC Filings 21,000+ US companies analyzed

Understanding Tax-Loss Harvesting

Tax-loss harvesting involves selling investments that have decreased in value to generate capital losses. These losses can then be used to offset capital gains, reducing your overall tax liability. In some cases, if capital losses exceed capital gains, you may be able to deduct a portion of the excess loss from your ordinary income, subject to certain limitations. This strategy can be particularly useful in volatile markets or during periods of portfolio rebalancing.

Worked Example: These Figures Today

The companies used as examples above, with the live figures behind them. Illustrations of the metric — not a ranking, not a shortlist, and not a recommendation.

Example companies for this topic, listed in the order the guide introduces them — figures as of 2026-09-11; prices refresh on page view. Source: Financial Modeling Prep, Yahoo Finance.
Ticker Company Price Change Market Cap P/E MoonshotScore
VTI Vanguard Total Stock Market Index Fund $376.27 +0.81% $2.3T 26.3 —
VXUS Vanguard Total International Stock ETF $86.28 -1.29% $663.1B — —
BND Vanguard Total Bond Market ETF $71.27 -0.64% $392.6B — —

Example Tax-Loss Harvesting Portfolio

For illustrative purposes, a tax-loss harvesting portfolio might include the following ETFs: * **VTI (Vanguard Total Stock Market ETF):** Provides broad exposure to the U.S. equity market. * **VXUS (Vanguard Total International Stock ETF):** Offers diversification across international stocks. * **BND (Vanguard Total Bond Market ETF):** Represents a wide range of investment-grade U.S. bonds.
“MoonshotScore rates a US-listed stock 0 to 100 — higher means stronger numbers. Most carry an older nine-factor score; the rest use five sector-relative pillars, re-ranked daily — common stocks and ADRs only. Funds, ETFs, warrants, units, SPACs, preferreds, and notes carry none. It is built for education and deeper due diligence, not financial advice.”
— Stock Expert AI published methodology (how MoonshotScore works)

Questions worth resolving before acting on the screen

What are the benefits of tax-loss harvesting?

The primary benefit is the potential to reduce your tax liability by offsetting capital gains with capital losses. This can lead to increased after-tax investment returns.

What is the 'wash sale' rule?

The wash sale rule prevents you from claiming a tax loss if you repurchase the same or a substantially similar investment within 30 days before or after the sale. This rule is designed to prevent investors from artificially generating tax losses.

How can I avoid the 'wash sale' rule?

To avoid the wash sale rule, you can invest in a similar but not identical asset. For example, if you sell an S&P 500 ETF, you could purchase a different S&P 500 ETF from another provider or invest in a broader market index fund.

Explore More Research

Stock Expert AI provides data and analysis tools for educational purposes. This is not financial advice. Past performance does not guarantee future results. Always consult a qualified financial advisor before making investment decisions. Data sources: Financial Modeling Prep, Yahoo Finance.