Capital Loss Deduction Calculator

What Is a Capital Loss Deduction?

A capital loss happens when you sell an investment for less than you paid for it.

For example:

• You bought stock for $5,000
• You sold it for $3,000
• Your capital loss is $2,000

The IRS allows you to:

1. Offset capital gains with capital losses
2. Deduct up to $3,000 per year against ordinary income
3. Carry forward unused losses to future years

If you are Married Filing Separately, the annual limit is $1,500 instead of $3,000.

This calculator applies those rules automatically.

What Does the Capital Loss Deduction Calculator Do?

The calculator helps you estimate:

• Net short-term capital gain or loss
• Net long-term capital gain or loss
• Total net capital gain or loss
• Capital loss deduction for the current year
• Capital loss carryover to next year
• Tax savings from the deduction
• Taxable capital gains after deduction
• Estimated tax on capital gains

Instead of doing the math by hand, you enter your numbers and the tool calculates everything instantly.

Understanding the Inputs

Let’s go through each field in the calculator so you know exactly what to enter.

1. Tax Year

You select the tax year (2020–2023).

The capital loss deduction limit is $3,000 for most filers in these years.

2. Filing Status

Your filing status affects the annual deduction limit.

Options include:

• Single
• Married Filing Jointly
• Married Filing Separately
• Head of Household

If you select Married Filing Separately, the calculator applies a $1,500 deduction limit.

All other statuses use $3,000.

3. Short-Term Capital Gains

These are gains from assets held one year or less.

Examples:

• Stocks sold within a year
• Short-term crypto trades

Short-term gains are taxed at your ordinary income tax rate.

4. Short-Term Capital Losses

Losses from assets held one year or less.

The calculator subtracts short-term losses from short-term gains to calculate:

Net Short-Term Capital Gain/Loss

5. Long-Term Capital Gains

These are gains from assets held more than one year.

Long-term gains usually receive lower tax rates:

• 0%
• 15%
• 20%

You select your estimated long-term capital gains tax rate in the calculator.

6. Long-Term Capital Losses

Losses from assets held longer than one year.

These offset long-term gains first.

7. Capital Loss Carryover

If you had unused capital losses from previous years, enter them here.

The calculator adds carryover to your current year results before applying the deduction limit.

8. Ordinary Taxable Income

This helps estimate tax savings from your capital loss deduction.

Short-term gains and deductions are calculated using your ordinary income tax rate.

9. Estimated Tax Rate

Select your marginal tax rate (10%–37%).

This rate is used to calculate:

• Tax savings from deductions
• Tax on short-term gains

10. Long-Term Capital Gains Tax Rate

Choose:

• 0%
• 15%
• 20%

This is used to estimate tax on long-term gains.

How the Calculator Works (Behind the Scenes)

Here is the step-by-step logic in simple terms.

Step 1: Calculate Net Short-Term Amount

Short-Term Gains – Short-Term Losses

Result:

• Positive = net gain
• Negative = net loss

Step 2: Calculate Net Long-Term Amount

Long-Term Gains – Long-Term Losses

Step 3: Calculate Total Net Capital Gain or Loss

Net Short-Term + Net Long-Term + Carryover

Now the calculator determines whether you have:

• A net capital gain
• A net capital loss

Step 4: Apply Capital Loss Deduction Limit

If total net is negative:

• You can deduct up to $3,000 (or $1,500 if married filing separately)
• The remaining loss becomes carryover

If total net is positive:

• No loss deduction applies
• The gain becomes taxable

Step 5: Calculate Tax Savings

If you have a deductible loss:

Deduction × Ordinary Tax Rate

Example:

• Deduction: $3,000
• Tax rate: 22%
• Tax savings: $660

Step 6: Estimate Capital Gains Tax

If total net gain is positive:

• Short-term gains taxed at ordinary rate
• Long-term gains taxed at long-term rate

The calculator separates both and adds them together.

Example: Real-Life Scenario

Let’s say:

• Short-term gains: $4,000
• Short-term losses: $6,000
• Long-term gains: $3,000
• Long-term losses: $1,000
• Carryover: $0
• Filing status: Single
• Tax rate: 22%
• Long-term rate: 15%

Step 1: Net Short-Term

$4,000 – $6,000 = –$2,000

Step 2: Net Long-Term

$3,000 – $1,000 = $2,000

Step 3: Total Net

–$2,000 + $2,000 = $0

Result:

• No net gain
• No net loss
• No deduction
• No carryover

You broke even for tax purposes.

Now imagine total net was –$5,000.

You could:

• Deduct $3,000 this year
• Carry forward $2,000 to next year
• Save $660 in taxes at a 22% rate

That’s the power of understanding capital loss deductions.

Why This Calculator Is Useful

Manual capital gains math gets confusing fast.

You have:

• Two holding periods
• Different tax rates
• Deduction limits
• Carryover rules

This calculator simplifies everything into clear results:

• What you owe
• What you deduct
• What you carry forward
• How much tax you save

It’s fast and practical.

Important Notes

• This calculator provides estimates only.
• Tax laws can change.
• Your actual tax may differ based on other income, deductions, and credits.
• Always consult a tax professional for personalized advice.