Capital Loss Carryover in 2026: The $3,000 Deduction Saves a Single Filer $0 to $1,110, and Income Up to $16,100 Uses None of It, While a $20,000 Carryover Saves $0 to $4,760 Against a Gain

A net capital loss comes off your other income only up to $3,000 a year, and everything above that waits for later years (26 U.S.C. 1211(b), 1212(b)). Two things decide what that is actually worth, and neither is in the headline rule: the tax bracket the $3,000 would come out of, and whether your income is large enough to use it. The same applies to a carried-over loss when it later meets a gain. The figures below come from the capital gains and loss carryover calculator (single filer, the 2026 brackets and the $16,100 standard deduction); it follows the Schedule D instructions line by line.

What the $3,000 is worth, by bracket

The deduction lowers taxable income, so it removes tax at the top rate you pay. Federal income tax saved by a $3,000 net loss, for a single filer with this taxable income before the loss and no other sales:

The 3.8% tax on investment income does not add to this: with a net loss, the $3,000 allowed reduces net investment income, which can only reduce that tax when other investment income is large enough to be taxed (26 CFR 1.1411-4(d)). Taxable income of $13,900 straddles the 10% edge at $12,400: $1,500 comes off at 12% and $1,500 at 10%, so the saving is $330, not 3,000 times either rate.

When income is too low to use it

The deduction is taken on the return in full, but the carryover is figured from taxable income. Line 1 of the Capital Loss Carryover Worksheet is taxable income after the deduction, and it may be negative; lines 3 and 4 then count only the part of the deduction that taxable income actually used. A single filer with a $10,000 long-term loss:

With $17,100 of other income, taxable income is -$2,000 after the deduction, so only $1,000 of the $3,000 reduced anything and $9,000 carries over instead of $7,000. The statute reaches the same place through "adjusted taxable income" (26 U.S.C. 1212(b)(2)); the worksheet clamps that at zero. At $19,100 (the standard deduction plus $3,000) and above the whole deduction is used. The other side of this is that the loss is not lost: it waits in the carryover, usable against later gains.

How long a loss lasts

With no gains to absorb it, a loss is deducted $3,000 a year until it is gone and the last year takes what is left. There is no time limit for an individual (Publication 550). Years in which something is deducted, counting this one:

In practice a later gain shortens this, because a carryover is treated as if you had incurred it in the next year (Publication 550) and so it cancels gains of that year first. A long-term carryover reduces long-term gains before short-term ones.

What a carryover saves when it meets a gain

A carryover is used against gains whether or not that is the best year for it, so what it saves depends on where those gains would have been taxed. A $20,000 long-term loss carryover meets a $20,000 long-term gain, single filer, taxable income before either as shown; the tax is federal income tax plus the 3.8% tax:

At $10,000 the gain would have been taxed at 0% anyway (the 0% rate runs to $49,450 of taxable income for a single filer in 2026), so the carryover saves nothing that year and is used up. At $30,000 only the $550 above the limit is taxed (15% is $83). From $60,000 up the whole gain is at 15% ($3,000), and at $600,000 it is above the $545,500 top of the 15% rate, so 20% plus the 3.8% tax is $4,760. The same carryover is worth $0 to $4,760, and the $3,000-a-year route earlier in this guide is worth $300 to $1,110; which of the two applies is set by the gains you realise, not by a choice about the carryover itself.

What this does not cover

It is the arithmetic of the rule, not advice on when to sell or whether to sell at a loss. Wash sales (a loss is not allowed if you buy substantially identical securities within 30 days before or after the sale, and that includes buying in an IRA), the 28% and 25% rates, state tax, the alternative minimum tax and married filing separately ($1,500 limit) are not in the figures. The brackets and limits are the 2026 ones; the 2027 amounts were not published when this was written. Check your own return or ask a tax professional before acting on any of it. This is general information, not tax advice.