How to Calculate Crypto Tax-Loss Harvesting

What is Crypto Tax-Loss Harvesting?

The Crypto Tax-Loss Harvesting Calculator identifies unrealized losses in your cryptocurrency portfolio that can be strategically sold to offset capital gains and reduce your tax liability, taking advantage of the fact that crypto is not subject to wash sale rules in most jurisdictions.

Formula

Tax Savings = Harvested Loss × Marginal Tax Rate

CB: Cost Basis ($) — Original purchase price including fees
FMV: Fair Market Value ($) — Current market price of the cryptocurrency
L: Unrealized Loss ($) — Difference between cost basis and current value (CB - FMV)
TR: Tax Rate (%) — Applicable marginal capital gains tax rate

Step-by-Step Guide

1Review your portfolio for positions currently trading below your cost basis
2Calculate the unrealized loss on each position (current price - purchase price)
3Sell losing positions to realize the loss, which offsets capital gains dollar-for-dollar
4Optionally repurchase immediately (no wash sale rule for crypto in US as of 2025)

Worked Examples

Input

1 BTC bought at $60,000, current price $42,000, 24% tax bracket, $30,000 in other crypto gains

Result

Harvested loss = $18,000, offsets $18,000 of gains, Tax savings = $18,000 × 0.24 = $4,320

Input

10 ETH bought at $3,500, current $2,800, no other gains

Result

Loss = $7,000, deduct $3,000 against income (US max), carry forward $4,000

Common Mistakes to Avoid

✕Assuming the crypto wash sale exemption will last forever — legislation has been proposed to close this loophole
✕Forgetting to track cost basis accurately across multiple exchanges and wallets
✕Harvesting losses without considering the long-term vs short-term capital gains rate impact

Frequently Asked Questions

Does the wash sale rule apply to crypto?

As of 2025, the IRS wash sale rule (which prevents claiming a loss if you repurchase within 30 days) does not apply to cryptocurrency because crypto is classified as property, not a security. However, proposed legislation may change this.

How much crypto loss can I deduct per year?

Crypto losses first offset crypto and other capital gains dollar-for-dollar with no limit. Remaining net losses can offset up to $3,000 of ordinary income per year in the US, with excess carried forward indefinitely.

Ready to calculate? Try the free Crypto Tax-Loss Harvesting Calculator

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