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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.
Examples3Screens60Updated2026-04-10Prices as ofOct 26, 2026 session

Figures come from Financial Modeling Prep (FMP). If FMP has no figure for a ticker, a price or fundamental may come from a Yahoo Finance fallback, or a price from an Alpaca fallback. SEC EDGAR is used only for filing links and company identity details (legal name, address), never for figures.

MoonshotScore V2 rates eligible US-listed companies from 0 to 100 against their sector peers on five pillars: Business Quality (weight 26), Financial Safety (weight 20), Valuation (weight 18), Growth Durability (weight 16) and Momentum (weight 12). It reads no news-sentiment or analyst data, and it is not a probability of future returns.

20,000+ 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 current 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 — prices, day change and market cap as of the Oct 26, 2026 trading session (FMP quote); P/E and MoonshotScore from our latest stored data. Source: Financial Modeling Prep, Yahoo Finance.
Ticker Company Price Change Market Cap MoonshotScore
VTI Vanguard Total Stock Market Index Fund $375.59 +0.69% $2.3T —
VXUS Vanguard Total International Stock ETF $82.63 +0.12% $649.9B —
BND Vanguard Total Bond Market ETF $71.27 +0.10% $389.9B —

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 using five sector-relative pillars. Higher means stronger numbers across business quality, safety, valuation, growth and momentum. Eligible 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.

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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. Figures come from Financial Modeling Prep (FMP). If FMP has no figure for a ticker, a price or fundamental may come from a Yahoo Finance fallback, or a price from an Alpaca fallback. SEC EDGAR is used only for filing links and company identity details (legal name, address), never for figures.