Estimate tax savings from crypto loss harvesting. Wash sale rule does NOT currently apply to crypto.
Estimated tax savings
—
Your breakdown
Updates live as you type| Step | Amount |
|---|
A loophole that still exists, for now
The wash sale rule lives in Section 1091 of the tax code, and it applies to a sale of "stock or securities." When you sell a stock at a loss and buy it back inside 30 days, the rule disallows the loss and rolls it into the basis of the replacement shares. Crypto sits outside that wording. The IRS treats virtual currency as property rather than a security, so under current law you can sell Bitcoin at a loss on Monday, rebuy it Monday afternoon, keep your full market exposure, and still claim the loss. This calculator estimates the tax that maneuver saves you.
That asymmetry is genuinely valuable and genuinely temporary. The Biden administration's Build Back Better proposal tried to extend the wash sale rule to digital assets, and similar language has resurfaced in later budget drafts. None has become law yet, but the direction of travel is clear. Harvest while the door is open and assume it may close in a future tax year.
How the savings are calculated
A harvested loss is only worth the tax it offsets. The tool applies your losses in the order the code allows: first against capital gains of any character, then up to $3,000 against ordinary income, with the rest carried forward. It multiplies the usable loss by your marginal rate to estimate the cash benefit this year. The $3,000 ordinary-income cap comes straight from the capital loss limitation, and any excess loss is not wasted, it simply waits to shelter future gains.
Harvesting a $25,000 paper loss
Suppose a coin you hold is sitting on a $25,000 unrealized loss. You already have $20,000 of realized gains elsewhere this year, and your marginal rate is 32%. You sell the losing position and rebuy it immediately. Here is the breakdown the calculator produces.
You pocket $7,360 in reduced tax while owning the same coin you started with, just at a fresh, lower cost basis. The catch on that reset basis is covered below.
The detail that bites later: your basis resets
Rebuying instantly is the whole point, but it lowers your cost basis to the rebuy price. If the coin recovers, you have a larger future gain waiting. Harvesting does not erase tax, it defers it and converts a chunk of it into a permanent rate arbitrage when you trade a high ordinary rate today for a lower long-term rate later. One more practical caution: there is no formal wash sale clock on crypto, but selling and rebuying within seconds, repeatedly, with no economic risk in between, is exactly the kind of pattern the IRS economic-substance doctrine exists to challenge. A few minutes of genuine market exposure is prudent.
Who benefits most from this strategy?
Anyone holding volatile positions that have dipped below cost while also sitting on realized gains for the year. It is most powerful for high earners in the 32% or 35% bracket, because the rate applied to the harvested loss is what determines the dollar benefit. A retiree in the 12% bracket gets far less.
Does selling and rebuying trigger a new holding period?
Yes. The rebought coins start a brand new holding period from the repurchase date. If you harvest a long-term position and rebuy, the clock resets to zero, so a quick sale afterward would be short-term. Factor that in before harvesting coins you might want to sell again soon.
Could a future law claw back losses I already claimed?
Tax law is generally not retroactive in this way. If Congress extends the wash sale rule to crypto, it would apply prospectively from the effective date. Losses harvested in earlier years under the current rules stand. That is the case for acting while the current treatment holds rather than waiting.