Tax-Loss Harvesting

Tax-loss harvesting is the practice of selling investments at a loss to offset capital gains (and up to $3,000 of ordinary income per year in the US), reducing your tax bill. To avoid the IRS wash-sale rule, you cannot buy back the same or a "substantially identical" security within 30 days. Tax-loss harvesting can add an estimated 0.5–1% per year to after-tax returns when applied systematically.