True financial success is not only determined by how much you earn but also by how wisely you manage what you keep. As your trusted financial advisor, we have the experience and expertise to recognize opportunities and utilize thoughtful strategies when necessary – like tax-loss harvesting.

What is Tax-Loss Harvesting?

Tax-loss harvesting is the practice of selling investments that have declined in value to realize a capital loss. While realizing a loss may feel counterintuitive, these losses can be used to offset capital gains elsewhere in your portfolio – helping you to lower your tax bill.

If your losses exceed your gains, you can potentially apply up to $3,000 per year to reduce your taxable income, with the remainder carried forward in future years.

Why This Matters to You

For individuals and families with sizable portfolios, capital gains taxes can quietly chip away at investment returns over time. Tax-loss harvesting provides a strategic way to reduce that burden by realizing losses on underperforming assets. These realized losses can help offset gains elsewhere in your portfolio, freeing up capital for reinvestment.

Just as importantly, this strategy offers a way to reposition your portfolio while staying actively invested. After a sale, your advisory team works with you to reinvest the proceeds in a similar (but not substantially identical) security – maintaining your investment exposure while unlocking valuable tax benefits. Over time, the tax savings can compound alongside your investments, adding measurable value to your wealth, supporting your financial legacy for generations.

“When you zoom out and look at the full picture, market pullbacks are always temporary because the market is remarkably resilient, “says M. Evan Jones, CFP®, Senior Vice President – Wealth Advisor at Clarity Wealth. “Throughout the long history of stock market investing, we’ve experienced different tax environments, interest rates, administrations, wars, natural disasters – and still the market has continued to grow. That’s good news for our families and the future we’re helping them build.”

Timing is Everything

Tax-loss harvesting is most effective when done proactively, ideally before year-end, when realized gains can still be offset. It’s critical to be mindful of the IRS’s wash sale rule, which disallows a loss if you purchase the same or a “substantially identical” security within 30 days before or after the sale.

That’s why this strategy is best implemented as part of a long-term plan, and not as a last-minute reaction. Rest assured that your advisory team carefully reviews your portfolio to help ensure any opportunities are maximized without compromising investment integrity or your goals.

Your Partner for Long-term Success

“We’re not just helping our families accumulate wealth in the short term – we’re helping them create a lasting legacy for their children and grandchildren,” adds Evan. “We see it as our responsibility to help guide you through volatility with clarity and confidence.”

Tax-loss harvesting is not a one-size-fits-all tactic. It requires thoughtful planning, a deep understanding of your portfolio, and meticulous attention to timing and tax implications. As your financial partner, Clarity Wealth is here to help guide you through these decisions and strategies, helping you turn market downturns into meaningful, long-term advantages for you and your loved ones.

Wells Fargo Advisors Financial Network does not provide legal or tax advice.

Investment products and services are offered through Wells Fargo Advisors Financial Network, LLC (WFAFN), Member SIPC. Clarity Wealth is a separate entity from WFAFN. PM-11292026-8017815.1.1