Can I tax-loss harvest in an IRA?

No. IRA gains and losses aren't reported on your tax return until withdrawal. Tax-loss harvesting only applies to taxable brokerage accounts.

What is substantially identical?

Selling VOO and buying VTI might be different enough (different indexes). Selling VOO and buying IVV (same index) may be substantially identical. IRS hasn't clarified ETFs. Many use different fund families to be safe.

How much can I save with tax-loss harvesting?

Depends on your gains, losses, and tax bracket. In a 24% bracket, harvesting $10,000 in losses could save $2,400 if used against ordinary income. Gains offset is often more valuable.

Tax-Loss Harvesting: A Complete Guide | Investors Lab

What Is Tax-Loss Harvesting?

Tax-loss harvesting means selling investments at a loss to offset capital gains (and up to $3,000 of ordinary income). You reduce your tax bill while potentially staying invested by buying a similar (but not "substantially identical") fund.

How It Works

1. You have a losing position in a taxable account.

2. You sell it, realizing the loss.

3. The loss offsets gains (or up to $3,000 of income).

4. You reinvest in a similar fund (e.g., sell S&P 500 Fund A, buy S&P 500 Fund B) to stay invested.

5. Avoid the wash sale rule: Don't buy the same or substantially identical security within 30 days.

Wash Sale Rule

If you buy the same security (or "substantially identical") within 30 days before or after the sale, the loss is disallowed. Use a different fund tracking the same index to stay invested and still harvest.

When It Makes Sense

Taxable accounts only. No benefit in IRAs/401(k)s.
When you have losses. Can't harvest gains as losses!
When you'd sell anyway or can swap to a similar investment. Don't let the tax tail wag the dog.

Caution: Don't sell a great investment just for a tax benefit. And don't over-complicate—simple buy-and-hold in tax-advantaged accounts avoids most of this.