Can I write off stock losses on my taxes?
Yes, once you sell. Losses offset capital gains first, then up to $3,000 of ordinary income per year, and any remainder carries forward indefinitely. Paper losses on stocks you still hold do not count.
Yes, with a few rules. First, the loss has to be realised, meaning you actually sold. A stock sitting in your account down 40 percent is a paper loss and does nothing for your taxes until you sell it.
Once realised, losses go against gains first. Sold one stock for a $2,000 gain and another for a $1,500 loss? You are taxed on $500. If your losses exceed your gains, up to $3,000 of the excess can be deducted from ordinary income, your salary, that year. Anything beyond $3,000 carries forward to next year, and the year after, with no expiry.
That carry-forward means a big loss is never wasted; it just takes time to use. A $15,000 net loss with no gains offsets $3,000 of income a year for five years, or all at once against a future gain.
The one thing that can void a loss is the wash sale rule: buy the same stock back within 30 days and the loss is postponed rather than deductible now. And losses inside an IRA or 401(k) cannot be deducted at all, because gains there are not taxed either.
Informational only, not financial advice. Updated September 4, 2026.
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