The case for tax gain harvesting

With markets climbing for most of the year, we haven’t had many chances to tax-loss harvest in 2025. That’s good news for your portfolio value—but it also means many investors still carry unrealized gains that can’t easily be offset.

However, if you built up capital loss carry forwards from a difficult year like 2022, you may actually want to consider doing the opposite: tax-gain harvesting.

This strategy can unlock meaningful planning benefits, especially when markets are hovering near all-time highs.

Why Tax-Gain Harvesting Works

If you have loss carry forwards on file, the IRS allows you to use them to offset current-year capital gains. Harvesting gains now can provide two advantages:

1) Lock in profits while markets are elevated

If you’re looking to trim risk after a big market run-up, harvesting gains lets you take chips off the table without creating a tax bill—your carryforwards absorb it.

2) Raise your cost basis to set up future tax-loss harvesting

When you sell and immediately buy back the same position, you “reset” your cost basis higher.
That matters because:

• When markets dip again 5–10% (as they always do during a normal year),
• Your now-higher cost basis creates the room to tax-loss harvest again,
• Which rebuilds your pool of loss carryforwards for future use.

Example: Many investors couldn’t tax-loss harvest during the pullback last April because gains were still too large. By raising your basis now, you’ll be positioned to capture losses the next time the market gives you an opportunity.

Do You Have Loss Carry Forwards Available?

Check your 2024 Schedule D, particularly lines 6, 7, 14, and 15. These lines will show whether you still have capital losses from prior years that can be used in 2025.

If you’re not sure how to read it, I’m happy to walk through it with you.

Benefits of Keeping Capital Losses on Record

Actively managing capital gains and losses throughout the year isn’t just about saving taxes—it gives you strategic flexibility. Carry forward losses provide:

1) Freedom to take profits whenever it makes sense

You’re not “handcuffed” by the tax bill. This allows more active risk management and better portfolio discipline.

2) Up to $3,000 in annual income reduction

Losses can offset ordinary income each year, saving up to $1,110 annually at the highest tax bracket.

3) Ability to rebalance without triggering taxes

Loss carry forwards make it far easier to shift between asset classes or trim oversized positions without facing unwanted capital gain surprises.

Want to Review Your Schedule D Together?

If you’d like to see whether tax-gain harvesting makes sense for you—or whether you still have loss carry forwards to use—email me and I can walk you through a quick review of Schedule D and map out the most tax-efficient approach for 2025.

Thoughtful tax management is one of the least visible, but most valuable, parts of long-term investing. Let’s make sure you’re capturing every available advantage.