Selling by December 31 is the easy half

The tax loss harvesting deadline is the last trading day of the year, measured by trade date. In 2026 that's Thursday, December 31, a regular session on the US exchange calendar.

Settlement doesn't push the loss into next year. Stock trades settle one business day after the trade, so a December 31 sale settles in January. The loss still lands in 2026, because sales of exchange-traded stock and options are dated by the trade. Your broker's year-end form will show the December date.

Leaving it to the last session has a cost, though. It's the day before a three-day weekend, and attention is thin. A limit order that never fills on December 31 means no loss for 2026, with no second try.

Pick your own deadline a week or two earlier. That leaves room to fix a missed fill. It also moves your clean re-buy date earlier, which matters if the ticker is one you trade every week.

The wash sale rule looks 30 days back and 30 days forward from a losing sale. Buy the same stock, or something substantially identical, inside that window and the loss is deferred. It moves into the cost basis of the new shares instead of your 2026 return.

For a December sale, the forward half of the window lands in the new year. Sell on December 31 and a re-buy any day through January 30 triggers the rule. The loss looked booked for 2026, then a January 20 purchase pulled it back out.

The backward half catches people too. Say you bought more of a losing stock on December 10 to average down. Selling the older shares at a loss on December 20 is a wash sale against that new lot. It sits inside the 30 days before the sale.

This bites hardest on the tickers you trade all the time. Sell the loser, trade it again on January 5, and the harvest is gone.

Count the sale day as day zero. Add 30 calendar days. A purchase on any of those days triggers the rule, and the day after is clean. Weekends and holidays still count as days.

Sell on Tuesday, December 1. Day 30 is December 31, so January 1 is the first clean day. That's the New Year holiday, so the first session you can buy in is Monday, January 4, 2027.

Sell on Tuesday, December 15. Day 30 is Thursday, January 14. Friday, January 15 is clean and is a trading day.

Sell on Thursday, December 31. Day 30 is Saturday, January 30. The first clean session is Monday, February 1. That's a full month off a ticker you may trade daily.

Now the other side of the ledger. A $2,000 harvested loss first offsets $2,000 of capital gains. Net losses beyond your gains offset up to $3,000 of ordinary income a year, and the rest carries forward.

No, and this version is worse than an ordinary wash sale. Buying the same stock in your IRA or Roth IRA inside the window still counts. The IRS settled that in a 2008 revenue ruling.

In a taxable account, a wash sale only delays the loss. It moves into the new shares' basis and comes back when you sell them. Inside an IRA there's no basis to carry it into, so the loss is gone for good.

The rule also reaches past your own taxable account. A purchase by your spouse counts. So does an automatic dividend reinvestment that buys a few shares of the same stock in January. Buying a call on the same stock inside the window counts too, because it's a contract to acquire the shares.

Before you sell, check every account that could touch the ticker. Turn off dividend reinvestment for it until the window closes.

Run this in the first half of December, not on the last day.

List every open position that's below its cost. Check each one for buys of the same ticker in the past 30 days, in any account. Turn off dividend reinvestment on the names you plan to sell. Decide which losers you'd actually be happy to stay out of for 31 days.

Place the sales during regular hours, with a limit close to the market. Confirm each fill the same day. Write each ticker and its first clean re-buy date somewhere you'll see every morning in January.

Tell your spouse which tickers are off limits. Leave the IRA alone on those names until the window closes. On the clean date, decide fresh whether you still want the position at all.

Broad index options such as SPX work differently. They're Section 1256 contracts, treated as sold at fair value on the last business day of the year. Open losses there are already counted, so there's nothing to harvest.

The harder case is the stock or ETF you trade most weeks. You have three honest choices. Harvest it and stay off the ticker for 31 days. Trade a different name that isn't substantially identical while you wait. Or skip harvesting that one and accept the higher tax bill.

Swapping one ETF for another that tracks the same index is a gray area. The IRS hasn't drawn a clear line on it. Don't assume a different fund issuer makes it safe.

Before you place the first December sale, check with a tax professional. Bring the list of tickers and the dates you plan to re-buy.