Tax Gain and Loss Harvesting

Gain harvesting. Long-term gains and qualified dividends are taxed at 0% while taxable income stays under $49,450, or $98,900 on a joint return, in 2026. Each year the planner sells and rebuys enough appreciated stock to fill that band, after the gains that spending already realizes. The sale raises basis, so later sales realize less. There is no wash sale rule for gains.

What a 0% gain still costs. A harvested gain is income. It can make more Social Security taxable, phase out the senior deduction and add state tax, and the year is re-solved with the gain so all three are counted. The stricter setting realizes only the gains that leave the year's total tax unchanged. Gains that fit the 0% band can't reach the first IRMAA threshold, so they don't raise Medicare premiums by themselves.

Loss harvesting. Losses sold this year offset gains first, then up to $3,000 of other income a year, and the rest carries forward. Only as much of the $3,000 is used as taxable income can absorb, as on the IRS Capital Loss Carryover Worksheet. The replacement shares carry a lower basis, so the deduction is partly a deferral. Buying back the same security within 30 days disallows the loss; this assumes a similar, not identical, replacement.

When it pays. Heirs receive a stepped-up basis, so basis you raise and never use is worth nothing to them. Harvesting gains pays when you would otherwise sell the same shares later at 15% or more: after Social Security and RMDs have filled the low brackets, or as a surviving spouse on single brackets.

Each year. The same loop as the Roth Conversion Planner: RMD, conversion, spending, then harvesting, with 2026 federal brackets, the senior deduction through 2028, Social Security taxed per IRS Pub. 915, the net investment income tax and IRMAA. The taxable account is one pool with one average basis, not individual lots.