Investment Strategy
Jun 12, 2026
Tax-loss harvesting generally refers to selling investments at a loss, when it makes sense, replacing them with similar investments which seek to keep your strategy intact while being mindful of the potential application of the wash sale rule, and using those losses to offset realized capital gains from other areas of your portfolio.
By offsetting gains, harvesting losses can reduce current-year taxable capital gains and therefore defer taxes that might otherwise be due today. That can leave more of your portfolio invested and compounding, which may may affect what you keep after taxes over time. Because taxes can erode returns, a disciplined focus on deferring and managing when taxes are paid can be an important part of long-term wealth building.
Tax-Loss Harvesting at a glance
Taxes are a top concern for high-net-worth investors.
In fact, tax management is ranked as the #1 financial need for households with $5+ million in investible assets. 1
#1
Even in strong markets, there are opportunities
On average over the past 10 years, 146 stocks in the S&P 500 have ended each year down 5% or more, and 356 stocks have experienced a drawdown of at least 5% at some point during the year—even when the overall market is up. 2
356
Tax-Loss Harvesting can help you keep more of what you earn
Optimizing potential tax savings
Our offering delivers tax-smart transitions and ongoing, automated tax management to potentially increase your tax savings.
Personalized investing
We offer a flexible approach with funding options like cash, securities or both, and tailored investing to incorporate your unique preferences and tax sensitivity.
Cost effective
Cost-efficient, tax-managed access to market indices (i.e. S&P 500, Russell 3000 and MSCI EAFE Expanded ADR index) as well as actively managed strategies.
Insights
Our team of portfolio strategists continue to innovate and optimize in this field, regularly publishing new insights and guidance to consider tax-loss harvesting throughout the life of your portfolio.
Meet the Team
Anjali Paranjpe
U.S. Head of Portfolio Solutions Group, Managing Director
Evelina Samson
Executive Director, Portfolio Advisory Group
Jake Tran
Executive Director, Regional Portfolio Specialist
Adam Ludman
Head of Tax Strategy
How does tax-loss harvesting work?
Identify the losing stocks
Volatility is a natural aspect of the markets—and can create timely opportunities for extracting tax benefits. Daily, systematic review of your portfolio can help identify securities for tax-loss harvesting.
Sell and reinvest in substitutes
Keep your portfolio on track after selling the losers by reinvesting in a similar but not identical security. The “wash sale rule” places restrictions on taking a current loss when a “substantially identical” investment is purchased within a certain period before or after the sale. The rule doesn’t prevent you from purchasing the security, it just creates potential negative consequences with respect to the timing of your ability to recognize the loss you may be seeking to utilize.
Potential tax savings
Finally, use your capital losses to offset your capital gains elsewhere in the portfolio. This may result in a lower tax payout all while staying true to your investment objectives.
How tax-loss harvesting can accelerate growth
An active tax management approach could help you reach your wealth goals faster by deferring capital gains—potentially keeping more of your money invested and compounding over time. Here’s a hypothetical investment journey to illustrate how gain deferral can work in practice.
Let’s say the individual invests $100,000 in a stock, and over the course of a month it loses $40,000 in value. They sell their remaining holdings at $60,000, resulting in a $40,000 loss. Then they find a similar, not identical, stock and buy $60,000 worth.
They can use their reserve of losses to offset realized capital gains in other parts of their portfolio deferring the payment of capital gains taxes today and allowing more assets to remain invested in this case, the $40,000 capital loss can be worth up to $16,320 in potential tax savings).
By repeating this process when opportunities arise, the investor may be able to systematically defer realized gains over time while keeping the portfolio positioned according to their long-term plan—potentially resulting in a lower tax bill in years when gains are realized and improving after-tax compounding.
All case studies are shown for illustrative purposes only and should not be relied upon as advice or interpreted as a recommendation. They are based on current market conditions that constitute our judgment and are subject to change. They are not representative of individual client experiences or results. Past performance is not a guarantee of the future performance of an investment.
FOR ILLUSTRATIVE PURPOSES ONLY. This hypothetical scenario does not reflect the performance of any specific investment and does not take into account various other factors which may impact actual performance.
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Tax-Loss Harvesting FAQs
Elevate your portfolio with our Team
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Source: Cerulli Associates, The Case for Direct Indexing: Differentiation in a Competitive Marketplace, December 2022.
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Source: J.P. Morgan Asset Management. Data as of December 31, 2025.
KEY RISKS
JPMorgan Chase & Co., its affiliates, and employees do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal and accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transaction.
The impact of a tax-loss harvesting strategy depends upon a variety of conditions, including the actual gains and losses incurred on holdings and future tax rates. Tax loss harvesting may not be appropriate for everyone. If you do not expect to realize net capital gains in the year, have net capital loss carry forwards, are concerned about deviation from your model investment portfolio, and/or are subject to low income tax rates or invest through a tax-deferred account, tax loss harvesting may not be optimal for your account. You should discuss these matters with your investment and tax advisors. Investment strategies that seek to enhance after-tax performance may be unable to fully realize strategic gains or harvest losses due to various factors. Market conditions may limit the ability to generate tax losses. Tax-loss harvesting involves the risks that the new investment could perform worse than the original investment and that transaction costs could offset the tax benefit. Also, a tax-managed strategy may cause a client portfolio to hold a security in order to achieve more favorable tax treatment or to sell a security in order to create tax losses. Investors should consult with a tax or legal advisor before making any investment decision.
INDEX DEFINITIONS
MSCI EAFE Expanded ADR Index is designed to represent the performance of U.S.-listed American Depositary Receipts (ADRs) for companies from MSCI EAFE markets (developed markets in Europe, Australasia, and the Far East, excluding the U.S. and Canada), using an “expanded” set of ADRs relative to MSCI’s standard ADR indexes.
Russell 3000 Index is a U.S. equity index that measures the performance of the 3,000 largest U.S.-domiciled, publicly traded companies (by market capitalization), representing the vast majority of the investable U.S. stock market.
The S&P 500 Index is an unmanaged broad-based index that is used as representation of the U.S. stock market. It includes 500 widely held common stocks. Total return figures reflect the reinvestment of dividends. “S&P500” is a trademark of Standard and Poor’s Corporation.
