Only a limited amount of net capital loss can offset ordinary income each year — the rest carries forward indefinitely until it’s fully used against future gains or income.
How it works
Capital losses first offset capital gains for the year. Any net loss remaining is deductible against ordinary income up to $3,000 ($1,500 if married filing separately), with the balance carried to next year.
What this does not include
This does not include the wash sale rule (which can disallow a loss from being claimed at all if a substantially identical security is repurchased shortly before or after the sale), or how carryovers are tracked separately for short-term and long-term losses.
How to use this calculator
- Enter total capital loss, capital gains this year, and filing status.
A worked example
A $20,000 total capital loss against $5,000 in capital gains, filing single: net loss after gains = $15,000, deduction this year (capped at $3,000 for single filers) = $3,000, carryover to next year = $12,000.
The same loss and gains, filing married-filing-separately: deduction this year (capped at $1,500 for MFS) = $1,500, carryover = $13,500 — a lower annual cap for that filing status.
What the variables mean
| Variable | Meaning |
|---|---|
| Total capital loss | Total realized capital losses for the year |
| Capital gains | Capital gains that offset losses first |
| Filing status | Determines the annual deduction cap against ordinary income |
Edge cases worth knowing
Capital gains offset losses dollar-for-dollar before the annual cap applies. Only the remaining net loss after that offset is subject to the $3,000 (or $1,500 for MFS) annual deduction limit against ordinary income.
A negative total capital loss has no meaning, so the calculator declines to show a result for that input.
Frequently asked questions
Does the carryover ever expire?
No — unlike many other tax attributes, a capital loss carryover continues indefinitely until fully used, even across many years.
What happens to an unused carryover if I die?
Any capital loss carryover remaining at death generally cannot be used on a future return and is lost — it does not transfer to an estate or heirs.
Can I choose to use less than the $3,000 limit in a given year?
No — the annual deduction against ordinary income is mandatory up to the limit if a net loss exists; it isn’t optional or electable.
