Tax Tuesday:
Tax-loss harvesting is a strategy that allows investors to turn market downturns into long-term tax advantages. When an investment in a taxable account is sold at a loss, that realized loss can be used to offset current or future capital gains. If losses exceed gains, up to $3,000 per year can be applied against ordinary income, and any remaining losses can carry forward indefinitely.
The key is staying invested. Instead of simply selling and sitting in cash, tax-loss harvesting allows you to reinvest into a similar - not ‘substantially identical’ - investment to maintain long-term market exposure while still capturing the loss.
This approach helps smooth future tax bills, reduces the drag of capital gains, and may support better after-tax performance over time. Coordinated correctly, tax-loss harvesting becomes a powerful tool within a broader, year-round tax-aware investment strategy.